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USD holds firm after mixed US data

USD - United States Dollar

Demand for the US dollar picked up slightly after economic data supported rising inflation. US retail sales missed expectations while producer prices climbed to a record number year-over-year. The US Dollar Index edged up marginally higher, moving up 0.02% to 90.54 at the time of writing.

US retail sales fell 1.3% in May, versus expectations of a 0.8% decline. The decline in retail sales suggests that spending on goods is starting to level out as consumers shift their spending to services and entertainment amid a reopening economy. The Producer Price Index climbed above expectations to 6.6% year-over-over, adding to concerns over rising inflation. Some analysts saw this set of mixed data as insufficient for the US Federal Reserve to hint at tightening up monetary policy tomorrow. The Fed is expected to argue that these inflationary pressures are transitory. Some suggest the US dollar could continue to struggle if the central bank sticks to its outlook of low rates for longer.

Key Movers

The euro continued to trade at the low 1.21 range after the release of the US data. EURUSD was up 0.5% at 1.2126 at the time of writing. Eurozone industrial output jumped to 0.8% month on month, with an expected figure of 0.4%, suggesting a broadening of the economic recovery, particularly in the manufacturing sector. This gave the euro some momentum, but the currency could mainly take its cues this week from the US dollar.

The pound fell to a one-month low against the US dollar, moving below 1.41. GBPUSD was down 0.17% at 1.4083 at the time of writing. The delay in the UK’s reopening from lockdown restrictions continued to weigh on the currency, despite upbeat UK jobs numbers.

Expected Ranges

EUR/USD: 1.2106 - 1.2144 ▲

GBP/USD: 1.404 - 1.4126 ▼

AUD/USD: 0.7686 - 0.7722 ▼

USD/CAD: 1.213 - 1.2196 ▲