Just as we thought the dollar had settled into a steady range ahead of next week’s bumper central bank meeting fest, including the FOMC get-together, the world’s reserve currency surged to the upside and the top of the recent range.

The usual (and persistent) Covid global growth concerns and China jitters saw the greenback push higher in the morning session yesterday. But the surprising beat in retail sales really helped propel it to month-to-date highs. Instead of falling as consensus estimated, the headline figure grew 0.7% m/m with sales within the control group (which excludes autos, gas and food services) surging 2.5%.

It seems US consumers are brushing off any concerns of a resurgent Covid and Delta issues.

Indeed, although confidence may have collapsed, rising incomes, employment and accumulated savings are seeing people continue to spend.

USD/CHF into July highs and resistance

This pair shot higher yesterday with the swissie the worst performing major currency on the week and month. Prices had been hovering around the 0.92 level but are now trading near resistance at the 0.9274 July high. We are not overbought on the daily RSI so we could edge up towards the figure.

The 2019-2020 downtrend lies above at 0.9342 and will offer major resistance. Initial support comes in around 0.92 where we would be back in the range.

Gold plunges as yields rise

While bond yields ticked up on the punchy US data, gold suffered as the dollar ramped higher. Prices had been holding around the $1800 mark, which is roughly the 50% retracement level of the June to August move.

But bugs were nowhere to be seen as sellers took the precious metal through $1780 support.

The June low at $1750 has offered some help with a rebound from yesterday’s low at $1745 seen this morning. Bearish sentiment has inevitably picked up on the MACD though some consolidation may be seen today, ahead of next week’s numerous risk events.

Traders will be watching the consumer confidence data from the University of Michigan released later today.

The index plummeted in August, but this has not been seen in other consumer surveys. Focus will also be on the inflation expectations data which the Fed use to determine their outlook.

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