Last week, the USD registered solid gains against all of the major currencies, a feat that is not likely to be repeated this week. On one hand, currency traders continue to expect the USD to benefit from rate hikes and an increase in long-term treasury yields. On the other hand, a cascade of economic indicators are slated to be released this week, most of which are dollar-neutral or dollar-negative. Of primary importance is retail sales data, which serve as proxy for the consumption component of GDP and are expected to be lukewarm. Current account data will also be released, and will serve as a reminder to currency traders of the growing dependence of the US on inward foreign investment. In short, the USD is being pulled in multiple directions, and will likely remain range-bound in the near-term. The Wall Street Journal reports:

Recently, markets have ignored the ballooning U.S. trade deficit, focusing instead on the growing U.S. interest-rate advantage. However, Bank of America’s Mr. Sinche said the massive expected deficit could help refocus the market’s attention.

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