Dollar trims losses but remains broadly weaker

Forex

The dollar trimmed losses against the other major currencies on Friday, but remained under broad selling pressure as disappointing U.S. data dampened optimism over the strength of the economy and lowered expectations for a 2016 rate hike by the Federal Reserve.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to 90.4, from July’s reading of 90.0. Analysts had forecast a larger increase to 91.5.

The data came after the U.S. Commerce Department said retail sales were flat in July, compared expectations for a 0.4% rise.

Core retail sales, which exclude automobile sales, fell by 0.3% in July, compared to forecasts for an advance of 0.2%.

A separate report showed that U.S. producer prices fell by 0.4% last month, disappointing expectations for a 0.1% rise and after a 0.5% gain in June.

Year-over-year, producer prices decreased by 0.2%, confounding expectations for a gain of 0.2%.

EUR/USD gained 0.32% to 1.1173.

The euro found some support after Eurostat said that euro zone gross domestic productrose 0.3% in the second quarter, unchanged from the previous quarter and in line with consensus forecasts.

Year-on-year, GDP in the single currency bloc rose 1.6% in the second quarter, matching both the expansion in the first three months of the year and the forecast.

The data was released after Germany surprised markets earlier on Friday with growth of 0.4%, compared to the 0.2% increase expected.

A separate report showed that euro zone industrial production rose 0.6% in June, beating expectations for a 0.5% gain and after a 1.2% decline the previous month.

GBP/USD edged down 0.12% to 1.2940, close to the previous session’s one-month low of 1.2934.

USD/JPY retreated 0.89% to 101.04, while USD/CHF shed 0.22% to 0.9733.

The Australian dollar was fractionally lower, with AUD/USD down 0.08% at 0.7692, while NZD/USD rose 0.26% to 0.7229.

Statistics New Zealand earlier reported that retail sales increased by 2.3% in the second quarter, exceeding expectations for a 0.9% rise.

Core retail sales, which exclude automobiles and gas stations, rose 2.6% in the last quarter.

Elsewhere, USD/CAD slid 0.30% to trade at 1.2954.

Markets were also jittery on Friday after data showed that China’s industrial production rose by an annualized rate of 6.0% in July, compared to expectations for a 6.1% increase.

Another report showed that the country’s retail sales rose by an annualized rate of 10.2% last month, confounding expectations for a 10.5% increase.

The data added to concerns over a slowdown in the world’s second largest economy.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.32% at 95.59, off the one-and-a-half week low of 95.19 hit earlier in the day.

Source by Investing.com