USD remains pressured after poor retail data
The US dollar index hit new 15-month lows overnight after a weaker-than-expected retail sales number weighed on the greenback.
June retail sales climbed only 0.2% versus expectations for a 0.5% gain with core retail sales, at 0.2%, also below expectations.
US industrial production was also weaker than forecast, falling 0.5%, versus expectations for a flat result.
The weaker US data contributed to growing expectations the Federal Reserve might be nearing the end of its rate hiking cycle.
US shares were higher, with the Dow Jones up 1.1%, with its seventh-straight day of gains the index’s best winning streak since early 2021.
The US dollar index fell to new 15-month lows before later rallying.
EUR, GBP the main beneficiaries of USD weakness
The US dollar ended broadly flat overnight after the sharp losses seen since last week’s lower than expected inflation reading.
The main beneficiaries to the USD’s recent weakness has been the other “major” currencies, especially in Europe. The EUR/USD hit 16-month highs overnight while the GBP/USD reached 15-month highs last week.
The USD/JPY has also turned sharply with the pair down 5.3% after reversing at the key 145.00 level that was seen as a potential area for intervention from Japanese authorities.
On the other hand, other currencies across Asia have seen less impressive gains, with worries about Chinese growth weighing on regional FX.
NZ CPI key for kiwi’s fate
The New Zealand dollar is in focus this morning with NZ inflation due at 8.45am AEST.
The market is looking for June-quarter CPI to fall to 1.0% (from 1.2% previously) with an annual rate forecast at 5.9% (from 6.7% previously).
The NZD/USD fell 0.8% overnight. The kiwi has recently been weaker after the Reserve Bank of New Zealand kept interest rates on hold last week. Financial markets believe the RBNZ has reached the end of its hiking cycle with no more rate increases priced into NZ money markets.
As a result, today’s inflation read will be critical. A number in line with forecasts – or lower – will likely confirm the RBNZ is now on hold. However, a higher number might spark fears of further rate NZ hikes, and could drive a rebound in the kiwi today.
Kiwi weaker ahead of CPI
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 21 July
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
