EUR / USD
Euro-zone industrial production declined 0.3% for June after a 1.1% dip the previous month with a 9.7% annual increase which had little impact. The Euro was unable to break above the 1.1750 level ahead of the New York open and drifted lower as the dollar resisted further selling pressure and commodity currencies edged lower.
US producer prices increased 1.0% for July, above consensus forecasts of 0.6% with the year-on-year increase at 7.8% from 7.3% previously and the highest annual rate for over 10 years. Core prices also increased 1.0% on the month, double market expectations, with the annual rate at 6.2% from 5.6% previously.
After a slightly weaker than expected CPI release on Wednesday, the data triggered an element of fresh concern over underlying inflation developments which also led to a slightly more defensive market tone with less confident risk conditions.
Initial jobless claims declined to 375,000 in the latest week from a revised 387,000 the previous week and in line with market expectations. Continuing claims also declined to 2.87mn from 2.98mn the previous week. The claims data did little to shift underlying expectations surrounding a firm labour market.
The dollar edged higher following the US data releases with a retreat for commodity currencies and a lack of underlying Euro backing with the single currency stabilising around 1.1730. The number of active coronavirus cases in Germany reached a 2-month high which caused from reservations over the outlook, but narrow ranges prevailed with the dollar little changed on Friday as the Euro held around 1.1735 as markets continued to monitor global risk conditions.
JPY
US Treasuries edged lower following the US producer prices data with the 10-year yield back above 1.35% while equity markets registered net losses, but with little overall change. The dollar was unable to make any headway despite slightly higher yields with a solid yen tone on the crosses.
There was a relatively weak 30-year bond auction which nudged longer-term yields higher with the dollar settling just below 110.50.
Narrow ranges prevailed in Asia on Asia with equity markets losing some ground amid underlying reservations surrounding coronavirus trends. There were concerns over further global supply difficulties following the closure of a key Chinese port due to a coronavirus outbreak with the Chinese economy also potentially vulnerable.
Markets will continue to monitor comments from Federal Reserve officials closely with widespread expectations that there will be tapering announcement at the September policy meeting. Fed Chair Powell will also deliver keynote comments at the Jackson Hole symposium in the last week of August.
Confidence in the Japanese economy remained fragile with the Tokyo Governor stating that the city faced a disaster-level problem.
The dollar consolidated around 110.40 in early Europe on Friday with the Euro just above 129.50 as narrow ranges prevailed.
GBP
Sterling was unable to make any headway following the latest GDP data with the weaker than expected industrial and construction data hampering confidence. There were also concerns that momentum in the economy would slow, lessening the potential for policy tightening by the Bank of England.
The NIESR estimated that GDP increased 1.0% for July with gains of 0.5% in each of the following two months. This would give quarterly growth of 2.4% for the third quarter, half the second-quarter pace. The economy could also be hampered by labour shortages which would put upward pressure on wages.
Overall risk conditions were slightly less constructive during the day and UK equities also lost some ground which curbed Sterling support.
The UK currency was unable to hold above 1.3850 against the dollar while the Euro secured a limited net recovery after holding support near 0.8450.
Sterling continued to lose ground after the European close and tested 1.3800 against the dollar. Sterling struggled to regain ground on Friday with further underlying concerns that the UK recovery could stall within the next few months. Sterling was just above 1.3800 against the dollar and the Euro recovered to the key 0.8500 area.
CHF
The Swiss franc edged lower on Thursday despite a slightly less confident tone surrounding risk appetite. There was further speculation that the National Bank would encourage a weaker currency tone and look to intervene in markets to help push the currency lower.
The Euro edged higher to 1.0830 while the dollar posted a slight net advance to 0.9230 at the European close. There were further reservations over global coronavirus developments, although the franc edged marginally lower on Friday with the Euro at 3-week highs near 1.0840.
Technical Levels
