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US Dollar higher on soft data

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US Dollar higher on soft data

The US dollar limped into Friday trading after a woeful Thursday session ended its favourable outlook. On Thursday the market absorbed dovish remarks from US Fed Chairman Ben Bernanke, who unexpectedly reaffirmed his support for loose monetary policy. The US dollar was broadly weaker heading into the Friday session, but sentiment quickly changed ahead of several pieces of soft data.

Friday’s economic newswire was marked by the release of several PPI indicators, all of which exceeded expectations. The PPI is a broad measure of the average changes in prices in primary markets, and is a key indicator of commodity inflation. PPI for the year ended in June came in at 2.5 percent, versus expectations of 2.1 percent. June PPI was 0.8 percent (0.3 percentage points higher than projections), while the YoY PPI excluding food and energy marginally beat expectations (1.7 percent versus 1.6 percent).

The US dollar index responded positively to the soft releases, edging up 0.23 percent to close New York trade at 82.94. Gains were however capped by the release of the highly anticipated Consumer Sentiment Index, which measures personal consumer confidence in economic activity. The reading was marginally lower than the consensus (85.0), coming in at 83.9.

The USDCAD reached a high of 1.0403 before consolidating at 1.0395, ending four consecutive days of decline. The pair was poised to test the 1.0412 resistance before the Consumer Sentiment Index capped its gains.

The USDJPY found support above the 99.00 threshold, closing New York trade at 99.2200 (+0.2600 percent). The bearish yen was unable to extend its gains into Friday’s session, after experiencing broad support from the two-day BoJ policy meetings.

The greenback made its most impressive gains against the Australian dollar on Friday, advancing 1.45 percent. The AUDUSD pair ended the day at 0.9049, a loss of 128 pips.

US dollar pairs can expect heavy movement next Tuesday with the release of key CPI figures. The trade week will however be dominated by several other reports, including the BoJ monetary policy minutes, the BoC interest rate decision and several UK data releases.

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