The U.S. dollar looks to finish the week on a positive note, but the economic docket is unlikely to help. The greenback was mostly flat overnight but remains stronger since its rally began Wednesday afternoon on slightly hawkish commentary from Janet Yellen. Yesterday’s data beat expectations, but overall recent economic indicators have been soft.
The weak trend resumed this morning as a report showed housing starts fell 5.5% in May, missing expectations of 4.1% growth. Building permits, a gauge for future housing data, slumped 4.9% in same month, down from an expected 1.7% increase. The University of Michigan consumer sentiment will cross the wire at 10 a.m. but is unlikely to change the direction of the greenback.
We expect the U.S. dollar to settle into ranges towards the end of the week and likely be range bound for the next couple of sessions as risk events remain limited.
In what feels like déjà vu, again and again, Greece has struck a deal with Euro-area finance ministers on another bailout. Ministers agreed to release 8.5 billion euro in new loans for Greece, which will allow the embattled country to make good on its commitments in July. On the upside, Greece is likely to fade from the headlines in the short-term.
This weekend is France’s second round of parliamentary elections. Newly elected President Emmanuel Macron’s party is expected to win big league, which will be seen as another setback for nationalism in Europe.
The safe-haven Japanese yen retreated as global stocks ticked higher. The European Stoxx 600 Index rose 0.6% and Japan’s Topix gained half a percent. U.S. equity futures are also pointing towards a modestly higher open.
The Bank of Japan left their extremely accommodative monetary policy unchanged. BoJ Governor Haruhiko Kuroda stated that central bank is only half way to their inflation target and tapped down expectations that the Bank would look to tighten policy in near-term, further weakening the yen.