US Dollar Uptrend Under Pressure Ahead of Sales Data and FOMC Rate Decision
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- US Retail Sales data will steer the US dollar in the short-term.
- US dollar basket chart flashes conflicting signals.
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US Dollar Sells-off Ahead of Retail Sales Release
The greenback is under pressure with the US dollar basket down around 120 pips since hitting a 228-month high at the start of the month. In part the basket has been underpinned by weakness in the Euro and Sterling – which have both strengthened in the past 24-hours – while recent data has been mixed. Last week ISM manufacturing release was much stronger than expected while the US Labour Report (NFP) showed a slower rate of job creation but higher average hourly earnings. And yesterday’s inflation release – stronger than expected – adds to the current conundrum facing the Fed who are looking to cut interest rates further next week in the face of a strong jobs/wages market alongside a robust inflation backdrop.
Today’s advanced look at US Retail Sales (August) is expected to show a month-on-month downturn to 0.2% from a prior month’s 0.7%. While the US consumer has more money, and the jobs market remains tight, the ongoing US-China trade war may see consumers pare back investment decision until the political backdrop looks clearer.
US Retail Sales Data
The recent sell-off in the US dollar has seen the greenback break below the 20-day moving average and touch the 50-day ma, adding to bearish momentum. The recent set of higher lows remain in place while the trend of higher highs has just been broken, although a retail sales beat may see this formation return.
US Dollar Basket Daily Price Chart (January - September 13, 2019)
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