US Production Ticking Along, But USD Softening Continues
There is nothing in the data out of the US this week which seems to be helping the USD regain its strong bid seen in prior months. Monday's retail sales were a disappointment when taking into account autos and gas as well as building materials, while today's industrial production at 0.3% is only a touch over expectations and is little cause for excitement.
We also have to remember that the market remains net long USDs, and with US yields having topped out, the push for higher levels clearly lacks momentum. Nevertheless, old habits die hard. Once again, sellers are coming in above 1.1600 to contain an attempted recovery, though with Italy still at loggerheads with the EU bloc, there is enough there to persuade traders that the time for a EUR recovery is not quite right.
USD/JPY is sticking to a tight range in and around 112.00, with fears over another stock market rout keeping the upside in check. USD/CHF is also digging in ahead of the 0.9850-20 congestion zone, with intraday buyers still leveraging off this base for now.
Markets tend to be pretty tight in the London time zone, though we also note the FOMC meeting minutes on Wednesday night. This may be keeping traders on the sidelines also, despite the fact that we see little the Fed can add to market guidance - forward or otherwise!