ASIA session review: Dollar weakens after Bullard’s comments

Data released (actual, consensus, previous): 

08:30 GMT UK Retail Sales (MoM) (Jul) 1.1%0.6%0.2% 

08:30 GMT UK Retail Sales (YoY) (Jul) 3.0%2.5%1.9% 

08:30 GMT UK Retail Sales ex-Fuel (MoM) (Jul) 1.1%0.6%0.3% 

08:30 GMT UK Retail Sales ex-Fuel (YoY) (Jul) 3.1%2.7%2.1% 

The dollar weakened for a second day against the yen after a U.S. central bank official cautioned against excessive optimism over the economy. 

The Federal Reserve Bank of St. Louis President James Bullard said policy makers should be careful in changing course based solely on economic forecasts, damping expectations the central bank is poised to reduce stimulus. 

The dollar has declined 2.1%. 

EURO: 

The euro tries to hold steady after its ovetnight attempt to recover. 

EUR/USD challenged $1.3300 overnight, but failed to set above and retreated. Initial support now comes at tha broken channel resistance line from Aug 9 at $1.3250, extending to recent lows near $1.3230. Below support remains at $1.3180 (Aug 2 lows) and $1.3080 (50% Fibo of the $1.2750 - $1.3400 rise). Above $1.3300 resistance is around $1.3315 (Tuesday’s highs), then - at $1.3400 (Aug 8 highs). 

POUND: 

The pound rose following the stronger-then-expected UK data. 

National Statistics informed on Thursday that year-over-year UK Retail Sales grew 3% in July, compared with the 1.9% increase in June and above forecasts of +2.5%. 

On a monthly basis UK Retail Sales climbed 1.1% in July, up from the 0.2% increase in June and above expectations of rising 0.6%. 

Annual Retail Sales excluding Fuel grew 3.1%, up a notch from the 2.1% rise and above market consensus of 2.7% growth. Month-over-month Retail Sales excluding Fuel edged up 1.1%, following a 0.3% increase and exceeding expectations of +0.6%. 

GBP/USD holds at $1.5585 after breaking above Friday’s highs at $1.5570. Above resistance is near $1.5680 (Jun 19 high) and $1.5750 (Jun 17 highs). Initial support is around yesterday’s lows on $1.5420, below - at $1.5200/90 (50% of the uptic from $1.4820). 

YEN: 

The yen advanced today after Finance Minister Taro Aso said Prime Minister Shinzo Abe hasn’t asked him to consider a reduction in the corporate tax rate. That contrasted with an Aug. 13 report in the Nikkei newspaper that Abe has called for a study to reduce the levy. 

USD/JPY holds a bit lower Y98.00. Initial support comes at Y97.00 with a break lower widens losses to Y95.80 (Aug 8 lows). Below support comes at channel line on Y95.40. 

Initial resistance remains at yesterday’s high on Y98.40. Strong resistance comes at Y99.20 (channel line from Jul 7). 

DATA AHEAD: 

At 12:30 GMT US will present Consumer Price Index ( 2.0% vs 1.8%), ahead of 13:00 GMT Net Long-Term TIC Flows. 

US Industrial Production ( 0.3% vs 0.3%) is due at 13:15 GMT, ahead of 14:00GMT NAHB Housing Market Index and Philadelphia Fed Manufacturing Survey (15.6 vs 19.8). 

BoC Review will be published at 14:30 GMT.

Source of information>>

More information>>