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Yet another bleak data for the greenback, AUDUSD soars

Summary:

  • Consumer confidence measured by the University of Michigan slid to 93.1
  • Inflation expectations nudge up
  • Industrial production slightly settles down USD bears

The end of the week could not have been worse for the greenback which is being sold-off following a slew of awful macroeconomic readings. Firstly, we got a disappointing print of retail sales which could raise concerns regarding an uptick in GDP in Q2. Secondly, consumer confidence deteriorated as the University of Michigan gauge slipped from 95 to 93.1 in July (the preliminary reading).

link do file download linkUS industrial production remains quite sturdy given deterioration across other data. Source: Bloomberg

Unlike soft data, US industrial output seems to be the brightest point in the US economy as for now. It shows an increase 0.4% mom while a forecast had pointed to 0.3% mom. With regard to a yearly basis there is still fairly a positive trend which seems to be strongly taken hold. What’s more, the manufacturing ISM suggests even higher figures going forward. In turn, the retail sales and CPI readings came in clearly below estimations, hence a slightly better than expected print of industrial production could be reassuring.

link do file download linkUniversity of Michigan index fell to the lowest level since October 2016, before Trump’s spree burst. Source: Bloomberg

There was a much worse reading from the US economy on the heels of industrial output. The University of Michigan gauge turned out to be the lowest since October 2016 which couldn’t portend well for a potential improvement in retail sales in upcoming months. Inflation expectations ticked up from 2.6% to 2.7% (1Y) and from 2.5% to 2.6% (5-10Y). On the other hand, the Conference Board index has been continuously at elevated levels and has played down weaker performance of the UoM index. However, it has to be said that the former has tended to react to changes in the labor market which has thrived of late.

By and large, the all data published today is a massive drag on the US dollar which remains in a tremendous retreat losing against all its major peers in G10. The GBP and AUD among the best performers.

link do file download linkThe AUDUSD is gaining a fifth day in a row being by far the best currency in G10 this week. Source: xStation5

The AUDUSD is holding onto its powerful uptrend being decisively the best performer in G10. The pair has been able to break a relevant resistance zone which has acted as a huge obstacle for bulls thus far. As a result, we’re getting closer to get the highest point since 2014. On the other hand, the market is already hot, hence some corrective moves towards a broken resistance area cannot be ruled out.

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