US Dollar retreats from 2-week highs, stays positive on day

After refreshing its highest level since late June at 94.04 in the early NA session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, started to consolidate its daily winnings and is now at 93.75, up 0.45% on the day.

Despite this late retreat, the index is still looking to close the second day in a row with earnings as the upbeat data from the U.S. attract investors to the greenback. According to the U.S. Census Bureau, retail sales increased 0.6% and 4.2% in July on a monthly and yearly basis respectively. Moreover, the August 2017 Empire State Manufacturing Survey revealed that the headline general business conditions index advanced to its highest level in nearly three years at 25.2.

However, before the FOMC releases the July meeting minutes tomorrow, the DXY is having a difficult time extending its gains. Although no major announcements are expected, participants might be looking to take some profit off the table before committing to larger long-USD positions. The housing starts and building permits data at the beginning of the session tomorrow is likely to be ignored by the markets.

• Fed and dollar to shift on today's data? - Scotiabank

Technical outlook

The index faces the initial hurdle at 94 (psychological level/daily high). A daily close above that level could open the door for further gains towards 95 (psychological level/Jul. 20 high) and 95.60 (Jul. 14 high). On the downside, supports could be seen at 93 (Aug. 14 low), 92.40 (Aug. 2 low), and 91.90 (May 3, 2016, low).

Today's data from the U.S.

• US: Retail sales for July 2017 were $478.9 billion, an increase of 0.6% from June
• NY Fed: Business conditions index climbed fifteen points to 25.2, highest level in nearly 3 years
• US: Prices for US imports edged up 0.1% in July
• US: Manufacturers’ & trade inventories estimated at $1,869.3 bln, up 0.5% from May 2017
• US: Consumer demand started the third quarter on a strong footing - Wells Fargo