US Dollar Price Action Set by Hawkish Comments and Soft Data

The US dollar's price action has been influenced by various market drivers this week. The release of CPI, PPI, and Retail Sales data showed soft numbers, causing odds for a September rate hike to slide from 50% to 30%. However, hawkish comments from Fed officials, including Beth Hammack, who stated that rates should be raised now despite the recent softening in inflation, have offset some of this data.

The larger USD/JPY carry trade has held up so far, with buyers jumping on pullbacks and tests of support. The US dollar's weekly chart shows a gravestone doji-like formation, indicating continued indecision among sellers. Despite the soft data, the market seems to be pricing in a rate hike at the end of the year.

The USD/JPY carry trade remains a crowded backdrop, with rumors of a Japanese rate hike in September doing little to excite carry unwind themes. The pair's price action suggests that it wants to test a breakout, with increasing aggression from buyers on pullbacks.