HomeContributorsFundamental AnalysisWeak Data Fails to Dent US Dollar; Sterling Weakens Near 10-day Low

Weak Data Fails to Dent US Dollar; Sterling Weakens Near 10-day Low

The dollar ignored a weaker-than-expected US JOLTs report and rose higher against the yen as the European session was coming to a close. The greenback gained against most of its major counterparts, with the dollar index rising a tenth of a percent to 96.125. Oil reversed from its earlier gains.

The JOLTS report showed the number of job openings in the US fell to 5.666 million in May from a downwardly revised 5.967 million in the previous month and fell short of expectations (5.950 million). The dollar weakened against the yen briefly upon the release of the figures, but was quick to recover and rose even higher. Dollar/yen was last trading at 114.40. Greenback traders are eyeing Janet Yellen’s two-day testimony in Congress on monetary policy starting tomorrow.

In the absence of important data releases out of the eurozone, the euro has been steady for the past two days. Euro/dollar was last trading at 1.1417.

Deputy BoE Governor Ben Broadbent avoided to address the topic of the next interest rate hike, but did warn on the negative impact the UK economy may face amid Brexit and less trade. Broadbent also said UK incomes would suffer from a likely fall in services exports to the EU. Many traders interpreted his views as being dovish, prompting sterling to soften to near 10-day lows against the US dollar. Pound/dollar was last trading at 1.2842.

The oil-linked Canadian dollar reacted negatively to the bearish reports on oil and followed crude oil prices lower. This meant the USD/CAD pair rose for the day to last trade at 1.2911. The loonie got some support from the upbeat housing data released during European session, however the gains were short-lived.

Canadian housing starts rose in June with the stand-alone seasonally-adjusted annual rate (SAAR) at 212,695 from a revised 195,000 the previous month and above expectations of a figure close to 200k. This could be a positive signal for the Bank of Canada ahead of its policy meeting tomorrow. Stronger housing starts means higher supply and could cap prices. Rising house prices have been one of the key topics monitored by the BoC.

Oil supply glut is keeping oil medium-term outlook weak, prompting major banks to start downgrading price forecasts. Oil prices reversed early daily gains and were trending downward as the European session was about to end. WTI was last trading at $44.27 a barrel while Brent was at $46.74.

Gold wasn’t relieved from the pressure either, with the dollar further strengthening in the late European session, the precious metal weakened further to last trade at $1,208.58 an ounce.

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