Dollar pared back its previous losses to post slight gains against the Euro and Yen. But, Dollar lacked strong support with the lukewarm and mixed US data. Moreover, the positive Eurozone data placed a lid on greenback’s further gains.

On Tuesday last week, the Dollar advanced against the Yen to post a high of 98.22 yen, from a low of 96.84 yen. Against the Euro, the Dollar gained for the 3rd straight session, as the Euro/USD pair reached a low of $1.3258 from $1.3315. Against the Pound, Dollar climbed slightly as the GBP/USD pair dropped to $1.5447 from $1.5574 on August 7th.

Meanwhile, the Euro declined against the Japanese Yen, as the Euro/JPY pair dropped to a low of 129.167 Yen. On Thursday, the Dollar held steady as the USD/JPY hovered around 98.52 yen, while against the Euro, Dollar gained for a fifth session as Euro/USD pair plunged to $1.3224 from $1.3307. But, the pound climbed up as the GBP/USD pair reached $1.5535.

The US retail sales data was upbeat as the report showed that retail sales (excluding gasoline, cars and building) rose by 0.5%. This is the fastest growth in the past seven months. This increased the speculations for Fed tapering its monetary stimulus by September and boosted the Dollar. Meanwhile, UK reported a drop in inflation data, with the CPI reading for July at 2.8%, which is less than the 14-month high of 2.9% in June.

Japan too had posted some downbeat economic data, as its GDP growth had slowed down in the second quarter. Moreover, the US jobless claims data showed a decrease by 15,000 to 322,000 that beat the expectations of a drop to 330,000. This is its lowest reading in six years. But, the U.K retail sales rose by 1.1% beating expectations of 0.7% that supported Pound against the rising dollar.

On Friday weekend, the Dollar index rose by 0.13% to 81.281. In line with this trend, the Euro declined by 0.12% against the Dollar to $1.3332, while the Yen too dropped by 0.22% as the USD/JPY was at 97.57 yen, after hitting a high of 97.77 yen.

Starting this week on Monday, the Dollar was sluggish as the Dollar index inched up by 0.1% to 81.30. Similarly, the Dollar rose by 0.1% against the Yen to 97.59 yen, after hitting a high of 97.735 Yen.

The Dollar was further buoyed by the steep rise in the US treasury yields, as the Fed monetary tapering speculations were strengthened. This is because any rise in the US Treasury bond yields will increase the appeal of dollar-denominated assets and consequently, boost dollar. Meanwhile, Japan further churned out disappointing data that revealed a widening of its Trade deficit in July. The exports too were seen rising below the forecast.

However, on Monday, the Dollar gains from the weak Yen and rising Bond yields were capped by the positive data released from the Eurozone. Germany, a major Euro nation, revealed a 0.2% rise in its producer prices in July, its first rise in last six months. The manufacturing index too grew by 51.1% from previous 50.7 in July, with the services index climbing to 51.7 from a previous reading of 51.3.

Thus, Dollar has been struggling to post a firm rally as its gains were spotty due to mixed US data. The U.K and Eurozone’s positive data too tamped down greenback’s gains. However, with the weakening in the Yen and a rise in the US treasury yields, future upbeat US data might possible launch dollar on a firm rally.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.