Dollar and yen gain on continued safe-haven buying: July 19, 2021

The greenback ended the day higher on Friday against majority of its peers, market showed muted reaction to upbeat U.S. retail sales data, however, safe-haven buying in usd and Japanese yen due to falling U.S. yields and weakness in U.S. stocks later pushed dollar higher in New York afternoon session especially versus risk currencies such as aud, nzd and cad.  
Reuters reported U.S. retail sales unexpectedly increased in June as demand for goods remained strong even as spending is shifting back to services, bolstering expectations that economic growth accelerated in the second quarter.    Retail sales rebounded 0.6% last month, the Commerce Department said on Friday. Data for May was revised down to show sales falling 1.7% instead of declining 1.3% as previously reported.     Economists polled by Reuters had forecast retail sales dropping 0.4%. But shortages of motor vehicles because of a global semiconductor supply squeeze, which is undercutting production, are hampering sales of automobiles.  
Versus the Japanese yen, dollar found renewed buying at 109.74 and bounced to 110.07 in Asia as Bank of Japan maintained its monetary policy. The pair ratcheted higher in early European morning and rose in tandem with U.S. yields to session highs at 110.34 in New York on the release of upbeat U.S. retail sales data before retreating to 110.04 on soft U.S. consumer sentiment data and broad based cross-buying yen.  
Earlier news from Reuters, Bank of Japan cut this fiscal year’s growth forecast on Friday but maintained its view the economy was headed for a moderate recovery, signaling that monetary policy will be on a holding pattern for the time being.    At its two-day rate review that ended on Friday, the BOJ also released an outline of its new scheme aimed at boosting funding for activities combating climate change.    It will offer zero-interest funds for a period of a year that can be rolled over any number of times to financial institutions that boost loans or investment for battling climate change, the outline showed.  
The single currency traded sideways in a narrow range in Asia before edging lower to 1.1798 in early European morning. Despite staging a recovery to 1.1822, price fell to session lows at 1.1793 ahead of New York open before rebounding to 1.1818 in New York on cross-buying of euro especially vs sterling, price last traded at 1.1804 near the close.  
The British pound swung wildly in hectic trading as despite dropping from 1.3840 in Asia to 1.3792 in early European morning, price rallied to intra-day high at 1.3861 in Europe. However, cable quickly erased its gains and later tumbled to session lows of 1.3760 near New York close on active cross-selling in sterling due to market concerns on recent rise in Covid cases in the U.K. and the lifting of Covid restrictions next Monday by the government.  
In other new, Reuters said that U.S. consumer sentiment fell sharply and unexpectedly in early July to the lowest level in five months as inflation worries dented confidence in the economic recovery, a survey showed on Friday.    The University of Michigan said its preliminary consumer sentiment index fell to 80.8 in the first half of this month – the lowest since February – from a final reading of 85.5 in June. Economists polled by Reuters had forecast the index would rise to 86.5.  
Data to be released this week :  
U.K. Rightmove house price, EU construction output and U.S. NAHB housing market index on Monday.  
Japan nationwide CPI, Germany producer prices, Swiss trade balance, exports, imports, EU current account, U.S. building permits, housing starts, rebook and New Zealand GDT price index on Tuesday.  
Japan exports, imports, trade balance, Australia Westpac leading index, retail sales, U.K. PSNB, PSNCR, Italy industrial sales, U.S. Mortgage application and new housing price index on Wednesday.  
Japan market holiday, France business climate, U.K. CBI trends orders, EU ECB refinancing rate, ECB deposit rate, U.S. initial jobless claims, continuing jobless claims, U.S. existing home sales, leading index change, KC manufacturing index and EU consumer confidence on Thursday.  
Australia manufacturing PMI, services PMI, Japan market holiday, U.K. Gfk consumer confidence, U.K. retail sales, France Markit manufacturing PMI, Markit services PMI, Germany Markit manufacturing PMI, Markit services PMI, EU Markit manufacturing PMI, Markit services PMI, U.K. Markit manufacturing PMI, Markit services PMI, Canada retail sales, U.S. Markit manufacturing PMI and Markit services PMI on Friday.  

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