US dollar: outlook for July 18-24
The past week was mixed for the US dollar. The currency weakened versus the British pound, and commodity currencies, but strengthened against Japanese yen.
There were many positive data releases in the United States: producer prices, unemployment claims, retail sales, industrial production. The figures confirmed that the US economy isn’t in bad shape. However, traders still don’t expect the Federal Reserve to raise interest rates neither in July, nor later this year and it’s limiting US dollar bulls. All in all, Forex majors were driven mostly not by the American news, but by the expectations about the potential actions of other central banks. We expect this trend to continue the next week, especially as the US economic calendar will be rather lite: pay attention to building permits and housing starts on Tuesday, as well as Philadelphia Fed manufacturing index, unemployment claims and existing home sales on Thursday.
The market’s risk sentiment is an important factor for the greenback: with S&P index at the record highs the currency stayed under pressure. If stocks correct to the downside, US dollar will get a chance to recover. All in all, US dollar index keeps consolidating between 96.80 and 95.50, where it has spent already almost a month. The break of this range will shape the next big move, although we don’t see such drivers next week.