U.S. dollar depreciated from 2-month highs

Last week the world’s reserve currency depreciated and lost some of the prior week’s gain, which had lifted the dollar to 2-month highs.

USD 

U.S. economic data was positive. Preliminary PMI indices showed further development, with the manufacturing PMI rising to 62.6 points and services index adjusting to 64.8 points, while remaining in the growth zone. The personal consumption expenditure price index rose by 3.9% and showed further rising prices in the country. Existing home sales were 5.8 million per year and slowed slightly compared to the last six weeks. New homes sales stood at 769,000 and showed a moderate slowdown. The number of new jobless claims was stable at 410,000 per week.

Pandemic trends stabilized as the global average for new cases fluctuated slightly from 345,000 to 368,000 per day. The Delta virus strain, which has a faster spread among humans, is receiving a lot of attention. India has suffered from it first, but the strain is beginning to dominate in both the U.K. and Russia, where significant increases in new cases are being recorded. In the U.K., the weekly average of new infections per day rose from 2,000 to 14,000, and in Russia from 8,000 to 18,000. The situation in the U.S. was stable as the weekly average of new cases fell from 12,600 to 12,000. The number of vaccines injected in the country rose from 316 million to 322 million, a change of 6 million, less than the previous week. Overall, the number of people vaccinated with at least one dose in the U.S. rose from 53.1% to 53.9% of the population and increased by only 0.8% over the week.

Euro 

The main currency pair EUR/USD moved according to the trend of the U.S. dollar, and the pair rose above the level of 1.19. Among the economic data in Europe were preliminary PMI indices – manufacturing PMI reached 63.1 points and was stable compared to the previous month, while services PMI index was at 58.0 and rose moderately, suggesting improving sentiment as national economies become more open. The German business climate index Ifo jumped to 101.8 points and has been at its highest level since November 2018. The EUR/USD pair closed the week with a rise of 0.6%.

JPY 

The main Asian pair USD/JPY appreciated to 111.0. Among the economic data were preliminary PMI indices - industry 51.5 and services 47.2. USD/JPY ended the week appreciating 0.5%.

GBP 

In the beginning of the week, the British pound appreciated against the U.S. dollar to 1,400 points, but later lost some of its gains and fell below 1,390. Among the economic data, there were preliminary PMI indices - 64.2 points in manufacturing and 61.7 in services. No important decisions were taken at the Central Bank meeting and monetary policy was not changed. GBP/USD ended the week up 0.6%.

Economic Events 

This week will start calmly, and important data is not scheduled for Monday. Tuesday will begin with the Japanese labour market indicators and retail sales in May, followed by the release of preliminary German inflation data for June and the U.S. Consumer Confidence Index. Industrial production indicators from Japan, German labour market indicators and preliminary European inflation are expected on Wednesday. Thursday will start with South Korean export data, German retail sales, and actual PMI indices will be released later. U.S. labour market data will be the main focus of attention on Friday.

According to Admirals market sentiment data, 62% of investors have long positions in the EUR/USD pair (down -24 percentage points from last week's data). In the main Asian pair USD/JPY, 36% of investors have long positions (fell by -9 percentage points). In the GBP/USD pair, 61% of participants expect a rise (down 21 percentage points). Such market data is interpreted as contraindicative, so EUR/USD and GBP/USD pairs are expected to depreciate and USD/JPY to appreciate. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.

Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com

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