US DOLLAR OUTLOOK – FOMC MINUTES, RETAIL SALES, YIELDS IN FOCUSUS Greenback bears despatched the broader DXY Index recoiling -0.3% decrease final
US DOLLAR OUTLOOK – FOMC MINUTES, RETAIL SALES, YIELDS IN FOCUS
- US Greenback bears despatched the broader DXY Index recoiling -0.3% decrease final week
- Inflation, shopper sentiment information weighed negatively on Treasury yields
- FOMC minutes due for launch might reinvigorate Fed hawks and USD bulls
The US Greenback weakened broadly and dragged the DXY Index -0.3% decrease on steadiness this previous week. This erased about half of the positive aspects notched post-NFPs and leaves the broader US Greenback up 0.4% month-to-date. Latest promoting stress throughout USD value motion largely follows disappointing financial information within the eyes of Fed hawks. Particularly, month-over-month inflation decelerated from 0.9% in June to 0.5% in July. CPI slowing gave some credibility to the Fed’s transitory inflation narrative, which in flip, sparked an unwind of Fed taper bets and US Greenback power.
US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID
Chart by @RichDvorakFX created utilizing TradingView
US Greenback weak point accelerated additional throughout Friday’s buying and selling session as markets digested the most recent shopper sentiment report. Largely fueled by issues in regards to the delta variant of covid, the headline shopper sentiment index plunged from 81.2 in July to 70.2 in August. That marks the seventh largest decline on file and leaves shopper sentiment on the lowest studying since 2011. Treasury bond yields tumbled in response and dragged the US Greenback alongside for the journey. The ten-year Treasury yield dropped a noteworthy 8-basis factors, for instance, to 1.28%.
That mentioned, the place the US Greenback heads subsequent seemingly hinges on how Treasury yields react to the upcoming launch of FOMC minutes and retail gross sales information. FOMC minutes from the July 27-28 Fed assembly, which finally tweaked “substantial additional progress” language within the press assertion, stands to offer some colour on the Fed taper debate and whether or not or not central financial institution officers have any urge for food for slowing asset purchases earlier than year-end. Retail gross sales information, alternatively, might make clear the diploma that deteriorating shopper sentiment has impacted spending habits.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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