Patchy data have kept the US dollar range-bound over the past few weeks. Although there are indications that the underlying trend in the US economy remains intact, the market has had to weigh this against the mixed tone of the recent data. The string of weak retail sales prints has been increasingly at odds with the Fed’s view that lower oil prices will boost consumption and inflation down the road. Headline and core CPI appear to have bottomed, however. Consumer prices (Friday) will provide evidence whether this has continued. “We expect a bigger pullback in headline CPI than the consensus, to -0.3% y/y from -0.1% y/y, but are at consensus for the fall in core CPI to 1.7% y/y”, says Barclys Other key data during the week include housing starts (Tuesday), existing home sales, and the Philly Fed (Thursday). Barclys notes:
- We expect slightly weaker outturns than the market consensus and the housing market data to show improvements.
- We expect housing starts for April to rise to 982k from 926k, but below consensus forecasts of 1020k.
- We expect existing home sales to rise slightly, to 5.2mn from 5.19mn, but again below the consensus of 5.22mn.
The USD is likely to remain under pressure over the coming week, driven by the bearish tone to data releases.
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