DXY Breaks Range as Economic Prints Weaken Dollar

The US Dollar Index (DXY) finally broke its range on Friday after several soft economic prints. On August 7, the payroll contraction was followed by a cooler consumer price reading on August 12 and a flat producer price reading on August 13 without causing the DXY to surrender its band. However, July retail sales contracted 0.6% against a consensus for a 0.1% gain, preliminary August consumer sentiment landed at 51 against a 54.5 consensus, and the index opened at its session high just short of 100.00 before piercing 99.50.

The rate story had already turned before Friday's data, with employers shedding jobs in July and consumer prices cooling down. Despite this, the currency held on to its range due to a resilient consumer that gave the Federal Reserve room to tighten into an energy shock. However, Friday's print removed the consumer from this argument.

The Euro carries the argument better than the Yen does, as a bloc that imports most of its energy through a chokepoint controlled by someone else is buying its currency above 1.1550 against the US Dollar. The calendar now hands the argument to the minutes of the Federal Open Market Committee (FOMC) meeting on Wednesday.