The dollar slipped lower against the basket of major currencies in early Friday’s trading, as lower expectations for an upcoming U.S. rate hike continued to dampen demand for the US currency. The greenback is on track for weekly close in red, poised to slip 1% against the basket of six major rival currencies, on continuing uncertainty about US monetary policy. Recent downbeat economic data from the US cooled initial strong expectation of Fed’s action in the near-term that were boosted by hawkish comments from Jackson Hole meeting.

On the other side, Euro regained traction and rallied to fresh nearly two-week high at 1.1325 against the dollar on Thursday, after the ECB left its benchmark interest rate at a record low at 0% and raised its growth forecast for 2016 from 1.6% to 1.7%.
The ECB left the door open for more stimulus with central bank’s President Mario Draghi saying that the ECB will study options to ensure it can pursue its unprecedented money-printing programme, but Draghi did not give any hint of anticipated extension of its asset purchases.
The ECB is fighting stubbornly low inflation and anemic economy growth by buying 1.74 trillion Euros worth bonds, keeping rates in the negative territory and giving free loans to the banks.

The Euro trades around 1.1270 zone in early European session, while Sterling remains pressured, holding around 1.33 handle, which was cracked on overnight’s extension to 1.3280.
Dollar/yen challenges 102 support after recovery action was rejected at 102.50 zone.
Australian dollar holds above 0.76 support, following two days in red and Thursday’s rejection above 0.77 mark.
US Crude oil was among top gainers on Thursday, rallying over 4% for the day, driven by surprisingly large drawdown in US crude stocks which dropped by 14.5 million barrels in the previous week, marking the biggest drop since 1999.
Oil price pulled back on Friday, on profit-taking, but remain on track for strong weekly bullish close on 6% weekly gains.

Highlights of the day

Asia

China’s inflation slowed to its weakest in almost a year in August, coming at 1.3%, below forecasted 1.7% and 1.8% in July, which all lay well below PBOS’s annual inflation target at 3%.
Europe

German exports fell unexpectedly in July, posting their steepest drop in nearly a year, while imports also edged down, suggesting Europe’s biggest economy started the third quarter on a weak footing after Britain’s vote to leave the European Union.
Seasonally adjusted exports fell 2.6 % on the month, marking the biggest monthly drop since August 2015 and undershooting forecast of a 0.3% increase.
America

Canadian Housing Starts

Housing starts fell in July to 198,400, down from a revised 218,300 in June but beat expectations of 195,000 starts. Hot housing markets in Canada’s two largest cities, Toronto and Vancouver, have sparked some fears of a housing bubble, even as other markets cool amid a slump in commodity price. Housing prices might be a bubble in some Canadian cities, but July data show that starts and construction rest on a firmer foundation tied to population growth and demand.
Analysts expect 190,000 starts in August.
Data is due at 12:15 GMT.

Canadian Employment
Unemployment rate is expected to stay unchanged at 6.9% in August, while forecast for Employment Change for 15K new jobs in August is positive, as July’s data showed a pullback to -31.2K.
Data is due at 12:30 GMT.

Important levels
EURUSD

The Euro is regaining ground after Thursday’s post ECB’s rally and quick pullback that fully retraced gains. The price found footstep at 1.1240 and looks for fresh attempt at initial 1.1300 barrier and Thursday’s peak at 1.1325.
Near-term focus remains at key 1.1365 resistance, as overall structure is bullish.
Initial support lies at 1.1240, followed by 1.1223 and 1.205, with loss of the latter to soften near-term tone.
GBPUSD

The Pound remains pressured after two days in red, attempting to stabilize around 1.3300 handle, after upside rejection at 1.3440 zone and subsequent pullback.
Weak near-term technical studies see risk of further easing on sustained break below 1.3300 support, to extend losses towards 1.3250, possibly towards breakpoints at 1.3165/55 (daily cloud base / Kijun-sen line.
Session high at 1.3330 marks initial resistance, while lift above Thursday’s peak at 1.3373 would ease downside pressure.
GOLD

Gold extends two-day pullback from $1352 on Friday and threatens strong supports at $1333 (daily Kijun-sen) and $1327 (daily Tenkan-sen). Softening daily technical studies see risk of deeper correction of $1302/$1352 rally, which may extend to $1321 pivot.
Daily cloud top now offers initial resistance at $1341, followed by yesterday’s high at $1349 and key $1352 peaks., Market Analysis