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US Dollar Remains Supported amid Quiet Release Schedule

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US Dollar Remains Supported amid Quiet Release Schedule

A lack of high profile economic data didn’t stop the greenback from advancing Tuesday, as investors looked ahead to the monthly budget statement while absorbing latest comments from a Federal Reserve official.

The US dollar index, a broad performance measure of the greenback against a basket of key rivals, advanced 0.15 percent to 80.77. Tuesday marked the second consecutive advance for the index, which has appreciated by more than 0.1 percent since June 4.

In economic data, US wholesale inventories advanced 1.1 percent in April, following a similar increase the prior month, the Commerce Department reported today in Washington. Economists forecast a smaller gain of 0.5 percent.

The National Federation of Independent Business said small business confidence in May reached its highest level since 2007, underpinned by stronger sales and business expectations. The business optimism index increased 1.4 points to 96.6.

However, the NFIB downplayed the reading, claiming optimism was still well below the norm in times of economic expansion. The four components most closely related to GDP and employment growth – job openings, job creation plans, inventory and capital spending plans – collectively declined in May.

The greenback was supported Monday after Federal Reserve Bank of St. Louis President James Bullard said the Fed could raise interest rates as early as Q1 2015 if GDP, inflation and employment continued to improve.

The euro fell sharply against its US counterpart for the second straight day, a sign the common currency was beginning to weaken at the hands of monetary policy. The EURUSD declined 0.34 percent to 1.3546. The trend line shows initial support at 1.3561 and resistance at 1.3649.

The European Central Bank last week announced unprecedented measures to combat deflation, including introducing a negative deposit rate that would effectively charge banks for depositing their reserves at the ECB. The ECB cut its overnight rate to 0.15 percent and set the deposit rate at -0.1 percent.

The dollar advanced for a second straight day against the British pound. The GBPUSD declined 0.25 percent to 1.6761. The pair is currently testing initial support at 1.6758. On the upside, resistance is likely found at 1.6807.

The US dollar rebounded against its northern rival, the loonie, advancing 0.1 percent to 1.0916. The trend line shows initial support at 1.0888 and resistance at 1.0933.

The Japanese yen shrugged off weak manufacturing data, posting modest gains against the greenback. The USDJPY fell 0.16 percent to 102.38. Initial support is likely found at 102.38 and resistance at 102.67.

In Japan, machine tool orders advanced 24.1 percent in May, following an advance of 48.7 percent the prior month, the Japan Machine Tool Builders’ Association reported.

The government’s tertiary industry index fell 5.4 percent in April, following an advance of 2.4 percent the prior month.

The US release schedule heats up Wednesday with the monthly budget statement, courtesy of the Financial Management Service. On Thursday the Commerce Department will report on retail sales and business inventories.

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