Forex today: Dollar takes-off on U.S. data

Treasury yields rose following solid US data, while markets await a speech from Federal Reserve's Chair Powell who repeated the mantra and made no shakes in FX specifically, although gold rallied then dropped significantly, as did WTI in improvements in the Iran saga - Links below to both stories, but with respect to the Fed', we are all priced in for 31bp worth of easing at the 31 July meeting. 

The US 2-year treasury yields climbed from 1.84% to 1.87% on the Retail Sales, (see below), while 10-year yields climbed from 2.09% to 2.14% before falling back to 2.10% as U.S. stocks stumbled, unable to attract further demand following yesterday's closing record highs. 

As for US data, US Retail Sales beat expectations in June, rising 0.4% m/m (0.2% expected) with core sales up a solid 0.7% (0.3% expected).

"On a three-month annualised basis, sales are up 7.5% with ex-auto and gas up 6.0%. The gains were broad-based with only electronics seeing a small pull back, suggesting that the consumer is alive and well. Factories were looking less rosy in June though, with industrial production flat on the month, a bit weaker than expected,"

analysts at ANZ Bank explained.

Currency action

Amid Brexit uncertainties, whereby Boris Johnson and Jeremy Hunt said overnight that they were prepared to abandon the Irish backstop plan and that they will not accept a five-year time limit or a unilateral exit clause from the backstop, the labour market showed that the unemployment rate remained at 3.8%, which was its lowest level since the mid-1970s. However, the employment growth did slow and GBP/USD dropped from 1.2517 to 1.24 the figure. 

• Elsewhere, EUR/USD lost ground from 1.1260 to just above 1.1200, with plenty of talk about the ECB’s easing options. 
• USD/JPY rallied from 107.95 to 108.25 on the retail sales data. 
• AUD/USD dropped to 0.7010 as President Trump turned up the trade war heat again saying he could impose more tariffs on China whenever he wanted to.
• NZD/USD dropped from 0.6735 to 0.6696 while the GDT dairy auction resulted in a 2.7% gain in prices overall.

Key notes from overnight:

• Gold bears back in control on dialled back Fed cuts expectations, targets below $1,400
• Federal Reserve Chairman Jerome Powell: We expect growth to remain solid, labor markets to stay strong
• Wall Street's benchmarks advances nipped in the bud