EURO SUBDUED AFTER DISAPPOINTING TRADE DATA; OIL PRICES LOG FIFTH GAIN

The euro fluctuated within a narrow range on Friday after regional trade figures failed to inspire confidence. Meanwhile, oil prices were on track for their fifth consecutive gain as traders looked ahead to weekly rig-count data.

The European Commission reported Friday that the euro area trade surplus rose much less than expected in May. The Eurozone registered a trade surplus of €19.7 billion for the month, up slightly from €19.6 billion the previous month. Analysts in a median estimate called for an expansion to €20.3 billion.

Italy’s global trade surplus rose sharply to €4.34 billion in May from €3.6 billion the month before, government data showed.

Meanwhile, Italy’s consumer price index declined 0.1% in June and was up 1.2% on an annualized basis.

The common currency fluctuated between 1.1390 and 1.1420 through the European session. The EUR/USD approached 1.15 at the start of the week before paring gains in later sessions.

In other currencies, the yen rebounded modestly against the dollar even as industrial production declined faster than expected. Japan’s Ministry of Economy, Trade and Industry reported Friday that industrial output fell by 3.6% in May, following a 3.3% decline the previous month.

In commodities, oil prices were poised to end the week on higher ground. The West Texas Intermediate (WTI) benchmark for US crude futures was up 0.6% at $46.36 a barrel. International Brent crude advanced 0.7% to $48.74 a barrel.

Later in the day, oilfield services provider Baker Hughes Inc. will release the latest rig-count figures, which are widely viewed as a proxy for the US shale industry. Active oil rigs have risen sharply this year, as price-sensitive producers responded to rebounding oil prices.

EURUSD

The euro was relatively ineffective on Friday, as it continued to trade within a narrow range against the dollar. The EUR/USD exchange rate faces strong resistance at 1.1456, which is the high from 13 July. On the flipside, immediate support is found at the 10-day moving average of 1.1396.

USDJPY

A bearish US dollar is beginning to weigh on the USD/JPY exchange rate, which has declined sharply from highs north of 114.00. The pair was last down 0.2% to test the 113.00 handle. A re-test of the 112.90 level is likely over the mid-term. On the opposite side of the spectrum, 113.70 is the next major barrier.

WTI OIL

Oil prices rebounded sharply this week, confirming the rangebound nature of the market. The latest upswing was fueled by signs of rising demand, with US crude stockpiles declining sharply. The latest gains also suggest that oil has established a near-term bottom of around $44 a barrel. This level is crucial, as any break below it could expose a deeper correction back toward the 21 June settlement low of $42.53 a barrel.