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Will the downward pressure on the greenback continue? |
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17th Jul 2020

Will the downward pressure on the greenback continue?

Last week, the US dollar index dropped to its lowest level since March as demand for the greenback waned. That was mostly because the number of coronavirus cases in the US continued to rise, leading to several states to implement stay-at-home orders. As such, most investors believe that the US economy could take a longer period to recover, pushing the Federal Reserve to implement more unconventional monetary policies. The euro, sterling, South African rand, and Swedish krone were among the best-performing currencies.
The housing sector plays a very important role in the United States. As you recall, it is the weakness in the sector that caused the 2008 financial crisis. Therefore, investors pay close attention to all housing starts in the economic calendar. 

On Wednesday, the National Association of Realtors will release the existing home sales numbers for the month of June. This number measures the number of existing residential buildings. Analysts see the sales rising from 3.9 million in May to 4.5 million. Before the current crisis, the sales were more than 5 million. The association will also release the house price index.

On Friday, the Census Bureau will publish the new home sales numbers. Analysts expect the numbers to rise by almost 3% to 688k.
Last week, the Office of National Statistics (ONS) released a vast amount of data from the UK. These numbers included inflation, employment, and manufacturing production. This week, the only major data from the UK will be the June retail sales numbers that will come out on Friday. Analysts believe that the headline and core retail sales dropping by 17.1% and 14.4% respectively. They could be wrong, however, because of the impressive numbers released last week.
The economic calendar this week will not be as busy as it was last week. On Monday, we will ger the producer price index data and the Buba monthly report from Germany. On Tuesday, the Japanese statistics office will release the national CPI data while Statistics Canada will deliver the country’s retail sales. The two releases will come a week after the BOJ and BOC delivered their rates decisions. 

On Wednesday, we will receive inflation data from Canada followed by crude oil inventories from the US. On Thursday, the Turkish central bank will deliver its rates decision and on Friday, Markit will release the flash PMI numbers.