The US dollar returned most of its recent gains to its forex counterparts as economic data turned out mixed. The core PCE price index was up 0.2% as expected while personal income rose by 0.4% as expected but personal spending was weaker at 0.1%. The Chicago PMI rose from 57.4 to 57.7 instead of dipping to 57.2 but the UoM consumer sentiment index was downgraded from 97.6 to 96.9. US ISM manufacturing PMI is due today and a drop from 57.7 to 57.2 is expected.


The euro was in free fall against its counterparts on Friday when data turned out mostly weaker than expected. Headline flash CPI slipped from 2.0% to 1.5% versus the 1.8% forecast while the core CPI dropped from 0.9% to 0.7% versus the 0.8% forecast. German retail sales and unemployment change data turned out stronger than expected but CPI, jobs, and spending data from France fell short of consensus. Final manufacturing PMI readings are lined up today.


The pound recovered against most of its forex peers at the end of the week on the lack of negative headlines pertaining to Brexit. The current account balance also turned out better than expected at a 12.1 billion GBP deficit from the earlier 25.7 billion GBP and the projected 16.3 billion GBP shortfall. The final GDP reading was unchanged at 0.7% as expected. UK manufacturing PMI is on today’s docket and an improvement from 54.6 to 55.1 is expected.


The franc was stuck in consolidation against the dollar and euro, but it gave up ground to the comdolls and Japanese yen. There were no major reports out of Switzerland then so the franc was reacting to country-specific events. Today has the retail sales report and manufacturing PMI due, with the former slated to show a smaller 0.8% drop and the latter expected to rise from 57.8 to 58.2.


The yen continued to take advantage of anti-USD and safe-haven flows at the end of the week. Japanese reports turned out mixed as household spending is down 3.8% year-over-year versus the projected 1.6% drop while preliminary industrial production turned out stronger than expected. Today, the Tankan survey printed mixed results as the manufacturing component improved from 10 to 12 versus the estimated reading of 14 while the non-manufacturing component rose from 18 to 20, outpacing the consensus at 19.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to advance against the euro but were still mostly weaker to the dollar and yen as risk aversion remained present. Chinese official manufacturing PMI climbed from 51.6 to 51.8 while the non-manufacturing component improved from 54.2 to 55.1. Over the weekend, the Caixin manufacturing PMI dipped from 51.7 to 51.2. Australian retail sales and building approvals data are due next.

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