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The Greenback is bouncing, ignoring weakening economic data

USD - United States Dollar

The U.S. dollar increases 0.11 percent this morning, despite the increase in the number of Americans filing applications for unemployment benefits, which is adding to concerns that the labor market is losing steam after job growth slowed sharply in May. The initial jobless claims numbers came in at 222k versus the 215k expected. Other data this morning showed that import prices fell by the most in five months in May amid a broad decline in the cost of goods - the latest indication of muted inflation pressures. Signs of a slowing labor market and mild inflation strengthen the case for the Fed to cut interest rates this year.

U.S. Commerce Secretary Wilbur Ross said the Group of 20 leaders summit in Japan later this month might be a forum where President Donald Trump and his Chinese counterpart Xi Jinping can meet and restart trade talks. Ross said the following in an interview yesterday: "Probably, at the 40,000-foot level, the level of the two presidents, the most that’ll be done is they’ll decide it’s worth reopening,... I don’t think that a G-20 pull-aside is a very likely place for the details of a 2,500-page agreement to be worked out. That needs to be in a conference room with detailed, technical people."

Ross added that it is too soon to speculate about the outcome of any meeting between the two leaders. On the other side, the Chinese foreign ministry has declined to say whether such a bilateral discussion is scheduled at the June 28-29 summit.

Technically speaking, the U.S. dollar index is bouncing from the 200 moving average touched on June 6th at around 96.50. It is trading at 97.06 at the time of this writing.

Key Movers

The Aussie dollar led G-10 currency losses after the country's employment rate held steady at 5.2 percent in May, missing the estimate for a drop to 5.1 percent. Employers added a net 42,300 jobs. However, the three-year bond yield slid to a new record low as market participants increased the probabilities that the central bank will cut interest rates to stimulate the slowing economy. The Aussie dollar is falling 0.23 percent versus the Greenback this morning.

In the U.K., with Theresa May stepping down as Conservative Party leader, her position and with it the job of Prime Minister will go to one of many candidates standing to replace her. So far, Boris Johnson tops first vote in the U.K. Conservative Party election; Boris Johnson won the most votes, and three others were knocked out (Leadsom, Harper, McVey). Seven proceed to the second vote next week: Boris Johnson, Jeremy Hunt, Michael Gove, Dominic Raab, Sajid Javid, Matt Hancock, and Rory Stewart. The Pound increases 0.18 percent versus the Kiwi dollar and 0.27 versus the U.S. dollar.

The U.S. dollar was stronger in yesterday’s trading session, as weak US CPI wasn't enough to move Fed expectations. The ECB is worried that a manufacturing slump that's taken hold in the Euro area will spread to other parts of the economy, deepening the region's slowdown. Figures Thursday show that industrial output fell for a second month in April — along with a downward revision to March. The EUR/USD pair falls 0.14 percent this morning.

Expected Ranges

USD/CAD: 1.3311 - 1.3364 ▲

EUR/USD: 1.1252 - 1.1313 ▼

GBP/USD: 1.2637 - 1.2745 ▼

AUD/USD: 0.6899 - 0.6925 ▼

NZD/USD: 0.6537 - 0.6576 ▼