Greenback bears took control this week as US economic updates leaned a bit negative and global risk sentiment had traders lightening up on safe havens.
United States Headlines and Economic data
- Fed Chair Powell says Trump’s attacks played no role in rate pause
- U.S. business inventories rise, sales drop biggest in three years
- U.S. retail sales rebound slightly in January a month after biggest decline in 10 years
- NFIB optimism index inches higher in February, still second-worst level since election
- U.S. producer prices rise less than expected in February
- U.S. core capital goods orders post biggest gain in six months
- U.S. import prices post largest gain in nine months
- U.S. weekly jobless claims increase more than expected
- China and US to reportedly push back Trump-Xi meeting to at least April
Major Market Drivers for the U.S Dollar
After taking a quick peek at the one hour chart overlay of USD pairs, it’s easy to see that it was easy to see that price action was pretty tame (no real big geopolitical catalysts for a change) and the bears held the bulls down most of the week. And after looking at this week’s U.S. headlines, counter currency influences and global risk sentiment, it was probably a mix of U.S. data and global risk sentiment that had the bears in control this week.
From the U.S., the economic calendar was pretty busy with diverse set of updates covering inflation, trade, employment and consumers, and just as diverse was the positive and negative reads as shown in the headlines above. Unfortunately for dollar bulls, it was the top tier indicators (PPI and core CPI) that likely influenced traders to lean negative on the Greenback as managing inflation is a core mandate of the Federal Reserve, who by the way is meeting this coming week. With inflation still very tame, it’s likely that the Fed will continue to stay patient with any potential rate hikes, and likely to continue to sound dovish this week–still very dollar bearish for now.
And on the global sentiment perspective, it looks pretty much like it was a risk-on week with global equities and oil markets moving higher. This is all likely buyers coming in on a combination of factors including the avoidance of a no-deal Brexit for now, central banks and governments keeping stimulus alive, and the continued forward progress and optimism on U.S.-China trade negotiations. Whatever the catalyst or catalysts may be, we saw safe haven currencies like the yen and franc taking hits lower on the week in this environment, and the Greenback couldn’t escape the sentiment as well to put it in second to last place against the majors for the week.