Dollar Weakness Following Poor Retail Report

EUR/USD
As has been the case throughout the week, participants have pushed EUR into further negative territory in the early stages of European trade as the ECB’s policy divergence with other major central banks remains a key focus. With a lack of tier 1 data or economic commentary out of the Eurozone, this set the trend throughout the morning until the US came to market with the pair remaining above the post-ECB lows of 1.3503. Today saw the first major US data releases of the week and saw a bout of USD weakness following a lower than expected retail sales report and higher than expected initial jobless claims. With these post-data gains erasing earlier losses, the pair headed towards the European close in relatively unchanged territory. Looking ahead, once again there is no tier 1 data out of the Eurozone, although ECB’s Linde is scheduled to speak.

GBP/USD
With a lack of tier 1 data or economic commentary out of the UK, the recent trend seen in EUR/GBP was once again observed in today’s session which saw the GBP/USD takes out stops through its tight overnight Asian range and 50DMA at 1.6802. Further upside for the pair was then granted after the weak US data with all eyes now on BoE Carney’s and UK chancellor Osborne’s annual Mansion House address. In terms of what to look out for from the address UK Chancellor George Osborne is set to reveal plans at his annual Mansion House speech that will speed up development of disused industrial sites, in his latest attempt to stop housing shortages from holding back economic growth.

USD/JPY
The pair traded in a relatively tight range throughout the first half of the session with the overnight gains in the pair capped by the 50DMA seen at 102.12. The one notable move for the pair today followed the US data, which saw the pair move below 102.00 amid the broad-based USD weakness. With newsflow light out of Japan, participants now await the BoJ monetary policy decision where the central bank are not expected to make any changes to their current policy regime. However, sources earlier in the week reported the BoJ may slightly raise their assessment on overseas economy. Furthermore, participants will be monitoring the situation in Iraq as tensions rise in the North of the nation and thus could see JPY benefit from safe-haven flows.