USD Maintains Gains Despite Weak Data

The U.S. dollar maintained its lead on Friday as most of the currencies turned weak by Friday’s close.

Economic data on the day saw the release of Germany’s retail sales which increased 3.3% on the month in January on nominal terms. In real terms, retail sales advanced by 2.6% in January. This beat the 1.9% increase forecast for the period.

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December’s retail sales from Germany were revised lower to show a 3.1% decline compared to previous estimates of a 4.3% drop. The rebound came after a dismal performance in the month before.

IHS Markit released the monthly PMI reports covering the manufacturing sector. The eurozone’s manufacturing PMI came in at 49.3, slightly better than 49.2 from the flash estimates. However, it still showed that the manufacturing sector was in contraction. The declines mostly came from Germany whose manufacturing sector was at 47.6.

The UK’s manufacturing PMI showed that activity eased to 52.0 in February. This was slower than January’s 52.6

Flash inflation estimates for February from the eurozone showed that consumer prices advanced slightly higher to 1.5%, from 1.4% in January this year. The data was somewhat encouraging after inflation eased strongly in the months before. The eurozone’s core inflation rate was estimated to have eased to 1.0% in February, down from 1.1% in January.

The NY trading session saw Canada’s GDP falling 0.1% which pushed the annualized GDP rate to 0.4%. This was the slowest pace of increase in Canada’s GDP in nearly two years. The data is likely to see the BoC hold rates steady when it meets this week.

From the US, consumer spending fell 0.5% in December. The Core PCE price index gained 0.2% on the month as expected. It was, however, the combined estimates for December and January.

Personal income was down 0.1%. Wages increased 0.3 percent in January after rising 0.5 percent in December. Meanwhile. the ISM’s manufacturing PMI for February fell to 54.2 against expectations of an unchanged print at 53.7 from January. Manufacturing prices paid fell to 49.4, missing estimates of a 51.6 increase from December’s 49.6.

Looking ahead, the economic data today saw the release of Australia’s building approvals. Data showed that building approvals rose 2.5%. Economists forecast that building approvals would rise 1.5% on the month after falling 8.4% the month before.

The European trading session is quiet with the release of the Sentix investor confidence. Expectations are for the data to show that Sentix investor confidence moderated to -3.1 from -3.7 previously. Later in the day, the producer price index data will be coming out from the eurozone. The forecast PPI increase is 0.4%, following the previous 0.8% easing.

From the NY trading session, we are only expecting the US construction to come out.

EURUSD Intraday Analysis

EURUSD (1.1373): The EURUSD currency pair maintained its choppy range as price action was seen declining off the intraday highs around 1.1407. The declines mark a choppy movement in prices. Despite the modest increase in price, the EURUSD remains subdued. In fact, it is likely to test the downside. Support could be coming in at 1.1327 – 1.1309 which may be tested in the near term as the bullish momentum is seemingly impossible to maintain. This comes as the trend line has been breached and Friday’s price action tested the breakout quickly. As a result, the price action confirms the downside.

USDJPY Intraday Analysis

USDJPY (111.94): The pair posted strong gains on Friday as the USDJPY cleared past the resistance level and maintained gains, settling on Friday at 111.87. With the resistance level at 111.26 cleared, any dips are likely to stall at this level. Establishing support here could confirm the upside in USDJPY as the currency pair attempts to test the upside toward 112.50 region in the near term.

XAUUSD Intraday Analysis

XAUUSD (1312.65): Gold prices extended strong declines on Friday marking the week with three consecutive daily declines. Price action tested the 1300 level and eased slightly lower only to settle back above the 1300 level. The support level at 1306 looks to be holding out for the moment. This could potentially put pressure on prices to the upside. We continue to watch price action possibly evolve into a head and shoulders pattern. The right shoulder is likely to form near the resistance level at 1321.58 region.