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US Dollar Back on its Heels as Weekly Gains Narrow

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US Dollar Back on its Heels as Weekly Gains Narrow

The US dollar was trading lower Friday after mixed US data reminded investors the country’s economic recovery was far from complete.

The US dollar index, a weighted average of the greenback’s performance versus six major peers, declined 0.15 percent to 80.37, trimming its weekly advance to just 0.12 percent.

The index was supported earlier in the week after economic data raised optimism about the US’ recovery at the start of the second quarter. However, mixed data in the second half of the week somewhat dimmed that optimism.

Personal income rose 0.3 percent in April, in line with forecasts, the Commerce Department confirmed today. However, the same report found that personal spending unexpectedly declined in the same month, falling 0.1 percent after a 1 percent gain in March.

Personal income growth will be relied upon heavily to spur the US’ struggling housing recovery. According to a recent report from the National Association of Realtors, 30-year fixed-rate mortgages are forecast to rise to 5.5 percent next year.

In a separate report, the University of Michigan revised its consumer sentiment index to 81.9 this month. Market analysts forecast a reading of 82.5. The report revealed households were still concerned about wages, which dampened expectations for inflation-adjusted income growth in the year ahead. However, survey respondents were optimistic job creation would remain elevated in the coming year.

Jobs growth has averaged 238,000 per month over the past three months. The Labor Department will publish May employment data next Friday.

Elsewhere, the Chicago purchasing managers’ index advanced to a seven-month high, industry data revealed today. The business barometer rose 2.5 percentage points to 65.5 in May, well above forecasts, which called for a decline to 61.

The EURUSD rose to an intraday high of 1.3645 before consolidating at 1.3636, advancing 0.25 percent. The trend line shows initial support at 1.3582 and resistance at 1.3647.

Economic releases from the Eurozone were mixed Friday. German retail sales declined 0.9 percent in April, following a slight gain the previous month. Economists expected an increase of 0.4 percent. Year-on-year, German retail sales advanced 3.4 percent versus expectations for 1.5 percent.

Italian producer prices fell 1.5 annually in April, while consumer prices accelerated 0.5 percent annually in May. However, the EU harmonized CPI rate advanced only 0.4 percent annually this month, official data showed.

The GBPUSD advanced 0.3 percent to 1.6768 after a light British calendar saw the pair decline nearly half a percent this week. The pair faces initial support at 1.6692 and resistance at 1.6788.

In North America, the USDCAD emerged from multi-week lows, advancing 0.09 percent to 1.0847. Initial support is likely found at 1.015 and resistance at 1.0870.

The Canadian dollar declined today after the federal government said the economy accelerated at a slower rate than forecast in the first quarter. Canadian GDP advanced 1.2 percent annually in Q1, shy of expectations calling for 1.8 percent.

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