- EUR/USD finds buyers near 200-hour SMA.
- Dollar weakness continues amidst below-par economy numbers from China
- Asian equities lower and the US stimulus talks still in a stalemate.
EUR/USD is trading near the 200-hour simple moving average as the haven-linked dollar failed to rally bids even after risk-off tone in Asian stock markets.
Chia Data Fails To Meet Expectations
China’s industrial production went up by 4.8 Percent y-o-y in July, missing expectations of 5.1 Percent. The industrial output had shown an expansionary trend in the three monthly readings before this.
The retail sales severely disappointed with a drop of 1.1 Percent while the market has expected a slight expansion of 0.1 Percent, in the reported period. This dip in retail sales has affected the expectations of a turnaround in China’s factory deflation, indicated by the producer price index released earlier this month.
The data released early Friday affected the risk sentiments in Asian trading. But, even then, the dollar failed to find buyers and has been struggling, possibly because of the deadlock in the US stimulus deal talk.
House Speaker Pelosi had said that the Republicans and the Democrats are “miles apart”, after an important meeting with Treasury Secretary Mnuchin.
Also, the Sino-US tensions have found some relief in the last 24hours. White House economic adviser on Thursday indicated that Washington is satisfied by Beijing’s progress in meeting commitments to purchase US goods in Phase 1 of the trade deal between the two countries; this increased the chances that the agreement will survive the initial review this weekend.
A positive trade environment can benefit the euro and weaken the dollar. EUR/USD was trading at 1.1812, near the 200-hour simple moving average currently at 1.18. The pullback from the Thursday high of 1.1864 settled near the said moving average, today.
If the Eurozone Gross Domestic Product fails to meet expectations to post a more extensive economic contraction in the second quarter, the common currency will witness more selling than buying. Also, the US Retail Sales data is due later today.
