US Dollar Mixed on Data, Lingering Trade Conflict

The US dollar is mixed against a myriad of currencies to finish the trading week. The greenback is contending with various economic numbers, geopolitical developments, and market events to carve out a concrete direction, which might be the case for the next several trading sessions. The next month might be pivotal for the buck’s performance for the remainder of 2019.

In July, retail sales advanced 0.7%, beating market forecasts of 0.3% and the previous month’s 0.3% gain, according to the US Census Bureau. Retail sales have enjoyed gains for six of the seven months in 2019. With the back-to-school and holiday shopping seasons on the horizon and the federal government postponing tariffs on $300 billion Chinese goods, US retail receipts might record steady increases for the rest of the year.
But a contraction in manufacturing and industrial output disappointed investors. Last month, manufacturing and industrial production tumbled 0.4% and 0.2%, respectively.
The Friday session started with housing data, showing that building permits spiked 8.1% in July and housing starts declined 4%. As the day progressed, investors were blindsided by a steep drop in consumer sentiment as the University of Michigan index plunged from 98.4 in June to 92.1 in July. This is the lowest it has been since the beginning of the year.
For much of the trading week, the market has been dominated by government bonds and the US-China trade dispute.
Earlier this week, the yield curve inverted – the yield on the 10-year Treasury note fell below the yield on the 2-year note – and the equities market was in panic mode because this is considered a reliable indicator of an upcoming recession. But this might be an unconventional blip because the market is flooded with negative-yielding bonds; Sweden just started selling a 10-year bond at 0.25% and many major economies are offering subzero bonds, including Japan, France, and Germany.
Meanwhile, the US made a trade concession with China, announcing that it would delay the new 10% import levies from September 1 to December 15. The administration said it was doing this for health, national security, and economic reasons. It is unknown if China will reciprocate.
The US Dollar Index was flat at 98.15, but it is poised for a weekly gain of 0.7%.
The USD/CAD currency pair tumbled 0.32% to 1.3272, from an opening of 1.3314, at 18:10 GMT on Friday. The EUR/USD dropped 0.08% to 1.1099, from an opening of 1.1109.

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