US Dollar Looks to China, Bank of England Inflation
The dollar was little changed today, drifting in and out of positive territory throughout much of the session. The Dow Jones FXCM dollar index remains in the upward channel that has held the greenback since the start of the month. Interim support rests at the lower bound trend line of the ascending channel, currently at 9515 with a downside break eying subsequent floors at 9460 and 9410. Topside resistance is seen at 9560 followed by the 23.6% Fibonacci retracement taken from the November 30th decline at 9590 and 9660.
The daily chart shows the index tightly pinned between the 20-day moving average and the 9515 trend line support that dates back to the July 22nd 2008 lows. Although the greenback has seen some strength this month on the back of concerns over the European sovereign debt crisis, a broader picture sees the index maintaining a downward channel that dates back to early November.
Performance against the majors was split today, with this morning’s winners and losers report mirrored at the close. The loonie remained the top performer against the dollar as energy commodities advanced, with NYMX crude oil gaining 1.30% on the session to close at $103.88. FX volatility remained subdued as government jawboning and increased rhetoric out of Europe continued to cross wires regarding the Greek debt crisis.
With the economic calendar picking up tomorrow, traders will be positioning for increased price action. Overnight China is expected to show inflation levels easing with April CPI called lower at 5.2% from the previous print of 5.4%. China will also be reporting on producer prices, industrial production, and retail sales. Event risk mounts tomorrow with the Bank of England inflation report. Once again the dollar will remain vulnerable to developments out of Europe, with traders eyeing Thursday’s US retail sales figures.
Written by Michael Boutros, Currency Analyst for DailyFX.com
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