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Solid US Economic data eases pressure on the FED to cut immediately, Dollar pared back loses


1. US Economic data still enduring – USD pares back losses, Aussie lost the most ground vs the USD

US retail sales figures released on Friday showed that consumer spending is still enduring and the April upward revision put investors on notice, that the FED may not have to cut rates imminently.  Earlier in the week, US CPI data (a measure of inflation) printed inline and although low, could still deter the FED from cutting rates next week.

The Dollar Index caught a bid and ended the week on a strong note. Last week we highlighted the strong technical support the USD Index hit and the bounce this week, yet again re-enforces that unless its longer-term mean and up trending T-Line is confidently broken the downside is limited. All of the majors lost ground versus the USD this week, with the worst of the losses observed by the Aussie, as shown by the performance chart below.

2. Performance chart of major FX pairs vs the USD

3. USD Index daily chart – Longer term mean and T-Line, still formidable support

4. USD Index 4hr Chart – Has hit resistance, watch price action closely. EURUSD and Swissie to be monitored as well.