US Economy Steaming Ahead, USD Stalled

A round of upbeat US economic data wasn't enough to add a fresh wave of US dollar buying Tuesday. The Australian dollar was the best performer while CHF lagged as global stocks rebounded. The Asia-Pacific calendar is barren.  We issued a new set of Premium trades; 2 on EURUSD and 1 on GBPUSD in light of triple moving average confluence in the former and stabilizing 55-MA in the latter. These and more trades in the latest Premium Insights.

The Fed is beginning to prove critics wrong with its upbeat economic forecasts. The number of releases pointed to a strengthening economy.

• Core durable goods orders rose 1.1% compared to 0.5% expected
• June consumer confidence rose to a 4-year high of 81.4 versus 75.1 expected
• The Richmond Fed rose to +8 compared to the +2 consensus
• The Case-Shiller April US home price index rose 1.7% m/m versus 1.2% expected

The stream of upbeat data was a blessing for US dollar bulls but the effect was moderate with the dollar climbing 30-40 pips. It's too soon to draw conclusions but the inability of the dollar to rally further on good news suggests a period of retracement and consolidation could be nearby.

Equity markets remain a key factor as volatility continues to increase, especially in Asia. The Shanghai Composite fell nearly 6% at one point on Tuesday only to completely rebound. In Japan, the Nikkei is trading 1.5% higher but swings of that magnitude are now common.

Early in Asian trading, USD/JPY has found some upside momentum tracking to 98.15. A break of Monday's high of 98.71 could spark a rush into longs.