USD rises ahead of keynote speech by Jerome Powell
The Swiss franc was little changed as traders reacted to better-than-expected economic data from Switzerland. According to the Federal Statistics Office, the country’s economy contracted by 9.3% in the second quarter after dropping by 0.7% in the first quarter. It dropped by 8.2% on a quarter-on-quarter basis. The two numbers were better than the 9.6% and 8.6% that analysts were expecting. According to the statistics office, the contraction was mostly because of weak consumer spending, weak exports, and weak fixed asset investments. They were partially offset by a slight increase in government spending.
The euro was little changed as traders reacted to strong economic data from Sweden, Italy, and the eurozone. According to the Swedish bureau of statistics, the country’s retail sales rose by 4.8% in July after rising by 2.9% in June. The sales rose by 1.9% on a month-on-month basis. Other data from the bureau of the economic analysis showed that consumer confidence rose from 83.3 in July to 84.4 in August. The manufacturing confidence rose to 84.4 from the previous 83.3. Meanwhile, in Italy, economic data showed that industrial orders declined by 11.8% in June while industrial sales fell by 16.40%. These numbers were better than the decline of 34.1% and 25.9% that was recorded in May.
The US dollar dipped as traders waited for Jerome Powell’s speech at the virtual central bank's summit at Jackson Hole. In the speech, Powell will talk about the US economy and the bank’s plan to address the current crisis. The dollar is also reacting to economic data from the US. The data showed that the US economy contracted by 31.7% in the second quarter. That was better than the first reading of 32.9%. The economy weakened by 5% in the first quarter, meaning that the country is in a technical recession. The Bureau of Labour Statistics also released worse initial and continuing jobless claims data. The numbers showed that more than 1.006 million people applied for jobless claims in the previous week. The number of continuing claims declined to 14.45 million.
The EUR/USD pair was little changed today as traders waited for the speech by Jerome Powell. The pair is trading at 1.1821, which is in the same range it has been in the past few days. On the four-hour chart, the pair is between the 50-day and 100-day EMA. It is also between the small ascending trend line that is shown in yellow. The accumulation and distribution indicator has also been rising. Therefore, the pair is likely to remain calm and possibly break out during Powell’s speech.
The USD/CHF pair is trading at 0.9075, which is slightly above the day’s low of 0.9065. On the four-hour chart, the price is slightly below the 50-day and 100-day exponential moving averages. Also, it is along the horizontal support that is shown in red and is also slightly below the descending trend line. The pair is also in an overall downward trend, meaning that the pair is likely to continue falling. If it does, the key level to watch will be the important psychological level at 0.9000.
The USD/JPY pair dropped slightly to an intraday low of 106.00. On the four-hour chart, the price is along the 50-day and 100-day EMA and is also below the dots of the Parabolic SAR. It is also below the 38.2% Fibonacci retracement level. The price is also forming a triangular pattern, which is not near its tip. This means that the price is likely to remain in consolidation before breaking out.