Daily Forex: U.S. Dollar (DXY) Moves Higher As China’s Economic Data Disappoints
- USD/JPY is losing some ground after the release of economic reports from Japan.
- China’s Industrial Production and Retail Sales reports highlight the negative impact of coronavirus-related measures.
- In the U.S., traders will focus on the NY Empire State Manufacturing Index report.
The economic data from Asia will set the tone for the whole day, although traders will also have a chance to take a look at several economic reports from the U.S. and EU.
USD/JPY is losing some ground after the release of the preliminary estimate of the second-quarter GDP Growth Rate report from Japan. The report indicated that GDP increased by 0.5%, compared to analyst consensus of 0.6%.
Meanwhile, Japan’s Industrial Production increased by 9.2% month-over-month in June, compared to analyst forecast which called for growth of 8.9%. On a year-over-year basis, Japan’s Industrial Production declined by 2.8%.
From a big picture point of view, USD/JPY is trying to stabilize after the recent pullback. The Japanese currency was under huge pressure in the first half of this year, and it looks that USD/JPY will need strong catalysts to gain additional upside momentum in the upcoming weeks.
In China, traders focused on the Industrial Production and Retail Sales reports. Industrial Production increased by 3.8% year-over-year in July, compared to analyst consensus of 4.6%. Retail Sales increased by 2.7% year-over-year, compared to analyst consensus of 5%.
The reports highlighted the negative impact of the coronavirus-related measures in China. Problems with coronavirus in China contribute to the slowdown of the world economy and may provide more support to safe-haven assets.
In response to the weak data, China’s Central Bank cut key rates to support demand for credit, providing support to USD/CNY.
In the Euro Area, traders will take a look at the Wholesale Prices report from Germany.
Typically, this report does not have a big impact on EUR/USD. However, any report on prices in Europe can move markets in the current environment.
Wholesale Prices are expected to grow by 0.8% month-over-month in July. On a year-over-year basis, Wholesale Prices are projected to increase by 20.9%.
In the U.S., traders will focus on the NY Empire State Manufacturing Index report for August. Analysts expect that NY Empire State Manufacturing Index declined from 11.1 in July to 5.5 in August.
It remains to be seen whether the report will have a material impact on the dynamics of the American currency. Most likely, traders will stay focused on general market sentiment and wait for the release of housing reports on Tuesday.
For a look at all of today’s economic events, check out our economic calendar.