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The USD completed yesterday’s trading session with mixed results versus its major rival currencies. During the first half of the day, the U.S. dollar eased versus the euro and the yen after government reports showed that Retail Sales fell 0.1% in July, below the 0.5% expected by analysts. The greenback retreated from earlier gains after concerns over gasoline supply following a U.S. inventory report showed that crude stockpiles and refined product supplies fell last week, declining to its lowest levels since last 10 years.

Following this report, the Crude Oil prices rocketed more than $4 per barrel hurting the USD against the EUR and increasing worries about the main economy’s growth outlook. However, the USD rebounded in the late trade session and the recovery erased earlier losses and the USD edged lower against the Euro and rose against the Yen. Also yesterday, Import Prices from the U.S. rose 1.00% more than expected, reaching 1.7%. This increase was preceded by sharp gains in energy and food prices leading prices for imported goods to their fastest annual gain on record.

Today will be another big news day for the greenback. The Core CPI is forecasted to decrease by 0.1% from 0.3% in the last month and the CPI is expected to be reduced to 0.4%, which shows that inflation is easing on the U.S. economy. The Unemployment Claims report, one of the most influential USD indicators, is forecasted by analysts to show a decrease of 15k jobless individuals, from 455K last week. Also today, the President of the FED Bank of Minneapolis will deliver a speech about Repercussions from the Financial Shock where we will find out if the FED will maintain its hawkish inflationary rhetoric. Traders should follow the Unemployment Claims report and CPI results which will determinate USD trends.

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The USD underwent a bullish trading session yesterday, as it appreciated against all of its major currency rivals. The dollar rose 0.5% and closed under 1.5320 versus the euro in yesterday’s trading session. Also, the USD saw steady gains against the GBP and CHF. The greenback saw significant bullishness yesterday as the Pending Home Sales beat our forecasts which showed an expected rise of 1%. Instead, the indicator rose 5.3% and added to another day of surprising US economic data supporting the USD. The indicator was also the first real sign of housing improvement in the US in recent history. Although foreclosures are accounted for in the figure, it is nice to see some positive housing numbers out of the US to support the latest bullish trend for the greenback in Forex trading. Yesterday’s numbers mark the second positive pending home sales this quarter, in June homes sales saw a 6.3% rise. In addition, the gain in pending home sales offset a bleak U.S. jobless claims report which saw a 35K rise from the expected mark of 420K. The swing in home sales, despite jobless data adds even more to the growing speculation that the housing sector has hit its bottom and will now begin to see steady growth. The data also backed expectations of U.S. rate hikes this year, which has fueled a rebound in the dollar over the past two weeks. Today we can expect a slower pace to the news cycle from the US as 3 events of lesser significance will be released. Preliminary Nonfarm Productivity and Unit Labor Costs along with Wholesale Inventories are forecasted to see positive gains, but should contribute little to volatility. If data returns inline with expectations we should see the Dollar’s resurrection continue as traders will look to infuse bullish USD positions.

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