The US dollar is currently stable. The dollar is currently making gains versus the Japanese yen, while selling off against the Australian dollar. The dollar is flat against other major currencies. Last week, the buck strengthened throughout the week and sold off last Friday. In recent history, the dollar has stopped weakening thanks to slowing global growth (particularly in the Eurozone) and recent weakness in Asian currencies.
Turning to recent news, President Trump eased trade war tensions with a recent tweet. Specifically, he claimed that China will take down its trade barriers while making a deal on intellectual property. He also claimed that "President Xi and I will always be friends", despite recent trade-related tensions. Last week, Trump raised the stakes against China by threatening to impose tariffs on another $100b worth of trade. As US exports to China are below $150b per year, Trump is signaling that China has limited strategic options.
Looking at recent economic data, non-farm payrolls missed expectations by a wide margin (103k vs 193k expected). ISM and Markit composite PMIs also missed expectations last week. While the United States currently enjoys the world's best economic outlook among major economies, slowing US growth is an additional cause for concern. Our short-term outlook on the dollar is neutral, while our medium-term outlook remains bearish.
USD/JPY is up today and currently trading above 107.0. EUR/USD is flat and trading above 1.2270. The pound is flat, and GBP/USD is currently above 1.4090.
Looking at US economic data this week, traders will be watching inflation data. Tomorrow, we'll see producer prices for March. On Wednesday, the most important day, we'll see the consumer price index for March. On Thursday, we'll see initial jobless claims. On Friday, we'll hear a speech from the Fed's Bullard and see consumer sentiment figures for March. Last week, non-farm payrolls figures missed expectations by a wide margin.
As the dollar gains strength, we are upgrading the dollar to neutral in the short-term. Note that the currency is now trading within normal conditions in the short-term time frame. Our analysis is based on various technical indicators when looking at a daily chart of the US dollar index.
Thanks to recent dollar weakness, we are downgrading the US dollar to bearish. Note that the currency is trading within normal conditions. This is based on technical indicators when looking at a weekly chart.