The lack of larger-scale Dollar gains on the back of deteriorating Chinese sentiment indicates that markets remain reluctant to build back USD long positions for now. That must be weighed – however – with indications that the Dollar is undervalued in the short-term vs some major currencies (excluding JPY): it may be a matter of time, or a simple lack of catalyst, to see some convergence of the Dollar with its short-term drivers.

Today, the market’s focus will be on June’s Retail Sales figures out of the US (expected to be quite strong), as well as Industrial Production, some housing data and TIC flows. These releases normally do not trigger wide market reactions by themselves, although a combined positive data flow today could at least help keep the Dollar losses capped for now.