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Dollar consolidates weekly gains ahead of mid-tier data

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The US Dollar capitalised on the upbeat PMI data from the US on Thursday, and the USD Index closed the fourth consecutive day in positive territory.

Durable Goods Orders for April and the revision to the University of Michigan’s Consumer Sentiment Survey for May will be featured in the US economic docket ahead of the weekend.

The S&P Global Composite PMI climbed to 54.4 in May’s flash estimate from 51.3 in April, showing that the business activity continued to expand at an accelerating pace. Manufacturing and Services PMIs improved to 50.9 and 54.8, respectively.

Following a downward correction seen in late European trading, the USD Index (DXY) regained its traction and climbed above 105.00 for the first time in ten days. Early Friday, the index was holding steady near Thursday’s closing level, while the benchmark 10-year US Treasury bond yield fluctuated below 4.5% after gaining more than 1% on Thursday.

Japan CPI up

In Friday Asian trading, the data from Japan showed that the National Consumer Price Index (CPI) rose 2.5% on a yearly basis in April, following the 2.7% growth recorded in March. In the same period, National CPI ex-fresh food rose 2.2%, matching the market expectation.

USDJPY showed no reaction to this data and extended its sideways grind at around 157.00.

Reserve Bank of New Zealand (RBNZ) Deputy Governor Hawkesby said on Friday that lowering interest rates was not a part of near-term discussions and that there was a lot of uncertainty about tradable inflation going forward.

After rising to its highest level in two months above 0.6150 on the RBNZ’s hawkish hold earlier in the week, NZDUSD lost its traction and retreated to the 0.6100 area.

The UK’s Office for National Statistics reported that Retail Sales declined 2.3% on a monthly basis in April. This reading followed the 0.2% contraction recorded in March and came in much worse than the market expectation for a decrease of 0.4%.

GBPUSD is under modest bearish pressure after the disappointing data and trades below 1.2700.

EURUSD registered small losses on Thursday, but managed to hold above 1.0800. The pair fluctuated in a tight range at around 1.0820 in the European morning trading on Friday. Germany’s Destatis confirmed earlier in the day that the real Gross Domestic Product expanded 0.2% on a quarterly basis in the first quarter.

After suffering heavy losses on Wednesday, Gold extended its slide on Thursday and fell more than 2% on the day. XAUUSD staged a technical correction early Friday and was trading below $2,340.

(Source: OANDA)