The US dollar is strengthening this morning, and is rising against all major currencies except the Australian dollar. Yesterday, the US dollar fell more than 1% (it's worst sell-off in many months) after major media outlets reported that China was planning on curtailing its US treasury bond purchases. This morning, the State Administration for Foreign Exchange (a department of the Chinese government) has denied the story according to Reuters. As such, US treasuries and the US dollar are strengthening. The dollar has now made up for its losses from yesterday. Looking at import and export prices, both numbers missed expectations, suggesting a weaker outlook for price increases. Later today, we'll see Core PPI and initial jobless claims. Our short-term and medium-term outlook on the dollar remains bearish.
USD/JPY is up today and currently trading above 111.80. EUR/USD is down slightly and is trading above 1.1940. The pound is down, and GBP/USD is currently above 1.3480.
Looking at economic data this week, markets will be watching upcoming retail sales and inflation figures. JOLTS job openings (5.9m vs. 6.0 expected) missed expectations. Export prices (-0.1% vs. 0.3% expected) and import prices (0.1% vs. 0.5% expected) both missed expectations. Later today, we'll get initial jobless claims and core PPI numbers. Friday is the most important day, and we'll see Core CPI, retail sales, and weekly earnings. Last week, nonfarm payrolls numbers missed expectations.
Following the holiday season sell-off, we are downgrading the US dollar to bearish. The currency is neither overbought nor oversold today, and trades within a normal range. This is based on technical indicators when looking at a weekly chart.