The US dollar is continuing to show potential bottoming signs. Tuesday’s release of hotter-than-expected US inflation data, combined with weaker CPI data from the UK and a drop in Eurozone industrial production today, have all helped to boost the appeal of the US dollar in favour of the euro and pound.
We have also seen the USD/JPY take out 133.00 resistance, while gold and silver have been trending lower on the back of rising bond yields.
But whether or not the recovery for the dollar will hold remains to be seen. The greenback has absorbed a lot of hawkish Fed speak and above-forecast US data. Yet it has bounced only modestly off its lows.
Investors have repeatedly shown preference to racier equities, which has weighed on the appetite for haven US dollar. But is the tide turning? Will the dollar index start trending higher again? The immediate focus will be on US retail sales due for release shortly.
Support for the dollar this morning came from weakening foreign currencies.