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FOREX-Dollar pauses near 6-month top ahead of big economic indicators

Published 16/07/2018, 11:05 am
FOREX-Dollar pauses near 6-month top ahead of big economic indicators
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By Swati Pandey

SYDNEY, July 16 (Reuters) - Major currencies held around recent ranges on Monday thanks to a lull in China-U.S. trade skirmishing and as investors await key data from the world's two biggest economies to determine whether global growth is running out of puff.

The dollar paused at 112.39 yen JPY= , not far from a six-month top of 112.79 set on Friday.

The index that tracks the dollar against six other major the currencies .DXY was barely changed at 94.750.

The dollar index went as high as 95.241 last week but quickly reversed gains after latest trade figures from China suggested the threat of tariffs had not had a significant impact as yet. about the economic hit to China's exports from stiff U.S. tariffs had sent the yuan crashing against the dollar CNH= in offshore markets. It was last at 6.7050 from an 11-month trough of 6.7326 touched on July 3.

Traders are now looking to second-quarter gross domestic product (GDP) data from China and June retail sales from the United States.

"Our economists think China's second-quarter GDP and June activity data released today will hold up better," JPMorgan (NYSE:JPM) analysts said in a note.

Analysts polled by Reuters expect the Chinese economy to expand an annual 6.7 percent from 6.8 percent a year ago. June retail sales and industrial production are also released today and tomorrow, and together with the Chinese data should provide reassurance that global growth remains resilient for now," the analysts added.

"After sustained derating, and with second-quarter earnings another potential upside catalyst, the scene is set for very bearish current sentiment to improve. That could allow a sustained rally until we near the next round of escalation of trade tensions towards the end of August."

U.S. President Donald Trump's summit with his Russian counterpart in Helsinki later this week will also be closely watched.

Federal Reserve chief Jerome Powell will make a semiannual appearance before Congress later this week. Ahead of the meeting, the central bank released its accompanying policy report which showed U.S. economic growth and the Fed expecting to keep raising rates gradually. U.S. economy, which is on its second longest expansion on record, has not yet suffered from the ongoing trade row with China.

Elsewhere, the euro EUR= was subdued, but held above a nine-day trough of $1.1610 touched last week. It was last down 0.1 percent at 1.1677.

The pound GBP= was a shade lower at $1.1322 from last week's low of $1.3101.

The tone for the two currencies will be set by eurozone inflation data this week and ongoing Brexit discussions with British Prime Minister Theresa May battling for her political survival.

On Monday, British lawmakers vote on amendments to legislation on the government's post-Brexit customs regime. Leading eurosceptics are set to vote in favour of amendments that May opposes and back their own proposals to toughen up her exit plan. May is not expected to be defeated on the amendments, a high number of votes in favour of altering the customs bill by members of her party could further undermine her negotiating strategy.

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