US Dollar Rises Amid Fed Speculation and Mixed Data

Here’s this week’s overview of the US Dollar:

• In the past week, we saw the US Dollar Index appreciate by 0.2% against a trade weighted basket of its peers.

  
  

• Underlying data was rather mixed last week with retail sales remaining flat and import and export data both missing expectations.

  Fed Chair Powell also delivered a more dovish speech than expected on Tuesday with markets beginning to price in the chances of two cuts this year more firmly.

  Housing data released later in the week, however, did show a rebound in housing starts and building permits after recent declines, moderating expectations of softening in demand and price pressures.

  
  

• The major data of the week proved to be yet another surprise in Jobless Claims data, which hit a 2 year high at 243k, putting the overall unemployment rate at 4.2%.

  This increase, along with other key indicators, suggests that the US labour market continued to soften during this period, bolstering expectations that the Federal Reserve may lower benchmark borrowing costs by September.

  
  

• Later in the week we saw the Dollar edge up due to a global IT outage causing a risk off sentiment in the market on Friday.

  The biggest piece of news last week, however, was Joe Biden announcing that he will not run for re-election in November with Kamala Harris set to take the Democratic nomination.

  Donald Trump remains the favourite to retake the Oval Office, but the picture is now far more uncertain until fresh polling data is produced.