Market Drivers – US Session: Markets Brace for UK Jobs Data and US Retail Sales Amid Dollar Pullback

The US Dollar hit a speed bump, snapping a four-day winning streak as the US Dollar Index (DXY) retreated under renewed selling pressure. The pullback was triggered by fleeting rumors—later downplayed—that President Donald Trump might move to oust Federal Reserve Chairman Jerome Powell. Compounding the dollar’s woes were softer-than-expected US Producer Price Index (PPI) figures, ongoing trade tensions, and heightened geopolitical concerns, which collectively dampened market sentiment. As attention shifts to July 17, key economic releases, including US Retail Sales and the UK labour market report, are poised to drive forex market dynamics.

In the US, Thursday’s spotlight falls on Retail Sales, a critical gauge of consumer spending, alongside a slew of other data points: weekly Initial Jobless Claims, Export/Import Prices, Business Inventories, the NAHB Housing Market Index, the Philly Fed Manufacturing Index, and TIC Flows. Remarks from Federal Reserve officials Williams, Kugler, and Cook will also be closely watched for clues on monetary policy direction. The softer PPI data and declining US yields have fueled speculation about future rate decisions, keeping the dollar on shaky ground.

Across the Atlantic, EUR/USD staged a modest recovery, rebounding from a three-week low near 1.1560 to close with slight gains in the low 1.1600s. The euro’s resilience comes ahead of the final Eurozone Inflation Rate data, which could influence expectations for European Central Bank policy. Meanwhile, GBP/USD clawed back from recent lows, posting respectable gains around the 1.3400 level. The UK’s upcoming jobs report, a pivotal event, will shape expectations for Bank of England rate decisions, with markets keenly attuned to any signs of labor market strength or weakness.

In Asia, USD/JPY endured a rollercoaster session, spiking above 149.00 before plummeting below 147.00. Japan’s Balance of Trade figures and weekly Foreign Bond Investment data, due Thursday, will provide fresh insights into the yen’s trajectory amid volatile global sentiment. Down under, AUD/USD edged up to the 0.6550 zone after three consecutive daily declines, with Australia’s labour market report and Consumer Inflation Expectations set to steer the Aussie dollar’s next moves.

Commodity markets also reflected the cautious mood. West Texas Intermediate (WTI) crude oil extended its weekly decline, dipping below $66.00 to a two-week low, driven by persistent trade concerns. Gold prices, however, reclaimed the $3,350 per troy ounce mark, buoyed by the dollar’s weakness, lower US yields, and ongoing trade unease. Silver followed suit, bouncing from $35.50 per ounce after two days of losses. As markets await Thursday’s data deluge, the interplay of economic indicators, central bank signals, and geopolitical developments will keep forex traders on high alert.