IFX Market Report: Friday 16th July 2021

After a tough week, the US Dollar starts this morning on the front foot, making advances against both the Euro and Sterling. A string of unfavourable data readings and fears over rising inflation caused the Dollar to depreciate earlier in the week, but as markets saw a “goodish pickup” in US Treasury bond yields, investors returned their attentions back to the Greenback. Adding to this, expectations that the Federal Reserve will tighten its policy sooner than anticipated amid rising inflationary pressures further acted as a stimulus for the Dollar’s surge.

Looking ahead to today, attentions turn to a packed US docket this afternoon. Dollar bulls will be hoping that Retail Sales and the preliminary readings of the Michigan Consumer Sentiment Index are both strong, helping keep Fed tapering concerns on the table. Given the recent rise in inflation, some are apprehensive about June’s Retail Sales figure. With a previous of -1.3%, if the reading can reach / surpass the forecast of -0.4% the Dollar will likely appreciate. It is the same case with the Michigan Consumer Sentiment, if the preliminary reading can achieve its forecast of 86.5, it would likely underpin a Dollar rally. Due to the fact that consumption accounts for almost 70% of US GDP, if both of these releases disappoint, it would likely prove detrimental to the Dollar.

GBPUSD traded rather flat on Thursday, opening at 1.3852 and closing at 1.3862. Overnight Cable struggled as the Dollar picked up, falling below the 1.38 handle just after the Asian close. Since then, the pair has been able to claw back some of its losses, but unable to reach or surpass the 1.3850 mark.

GBPEUR had a positive session yesterday, once again reaching the 1.17’s. The pair started the day at 1.1697 and was able to close at 1.1730.

EURUSD opened Thursday at 1.1842 and closed at 1.1817. The pair will be looking to data from both the US and EU for direction today.

At 10:00 the EU will be releasing June’s Core Inflation Rate, forecasted at 0.9%. Also released at 10:00 will be EU’s Balance of Trade for May, Inflation Rate YoY and MoM for June.

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