July 16 (Reuters) - Dollar a shade firmer as mixed data from the U.S. and China triggered a 4.8% drop in the CSI 300 and much gentler profit-taking on riskier assets elsewhere ahead of the EU summit Friday and Saturday.
FX moves were fairly staid as the market digested good and bad news about the Chinese and U.S. economic recoveries, with China swinging back to positive GDP for the year , but with a weaker-than-expected increase in June retail sales, helping the haven dollar index to its 96.32 session high after Wednesday’s ricochet away from a brush with June’s lows.
On the U.S. data front, June retail sales beat f/c and returned to y/y growth of 1.1% , though rising COVID-19 cases and some tightening of mitigation efforts are casting a shadow on H2 sales prospects, particularly if vastly enhanced unemployment benefits cease at the end of this month.
As a reminder of just how high and hard it is to climb out of the pandemic hole, new jobless claims remained extraordinarily elevated at 1.300 mln vs 1.250 mln f/c , though likely skewed seasonal adjustments probably masked a worse result. Again, recent lockdowns to deal with virus outbreaks create uncertainty about jobs prospects. And a surge in the NAHB index to pre-pandemic levels is seen as driven by an exodus from cities to suburbs motivated by pandemic fallout and historically low mortgage rates.
With it all, and after the ECB hit ditto on their current easing and pandemic backstopping playbook , EUR/USD fell back from the shadow of Wednesday’s 4-month high at 1.1452, as traders waited to see what the EU summit brings and whether wobbles in bubbly stock markets might turn into something more than a pause for the TINA cause that weighs on the haven dollar .
Better-than-forecast UK jobs data didn’t provide initial traction for GBP/USD as risk was coming off and lifting the dollar against the risk-sensitive pound at the time, but like most majors, no important ground was broken by today’s price range which neared cloud top support, but remains trapped above by the 200-DMA and June’s high.
USD/JPY rode the risk-off dollar boost back above the 21-DMA and daily tanken at 107.21, but still below this week’s high at 107.42.
High beta currencies, such as AUD/USD, backed off on the day’s risk-off vibe. AUD/USD’s also running into long profit-taking after Wednesday’s 0.7038 high stalled near June and January peaks and after a speciously strong Aussie jobs report.
Oil weakened, but so too did gold and silver with the dollar’s bid.
Mostly second-tier economic data out Friday leaves the focus on the EU summit, pandemic and China news.
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(Editing by Terence Gabriel Randolph Donney is a Reuters market analyst. The views expressed are his own.)
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