Dollar index holds near two-week high

On Friday, the UK retail sales fell for a fourth consecutive month in August, the longest slump in at least 25 years, as Coronavirus spread and supply shortages take a toll, adding downside risk to the GDP outlook for the third quarter. Investors consider this another reason for the Bank of England to delay increasing its hawkish stance at its September meeting.

The 1.2% fall in retail sales figures last month surprised economists as well.

DXY stays in a range

Gains in the airline sector helped lift European stock markets Friday on hopes for easing Covid restrictions, while the dollar held near a three-week high after US retail sales unexpectedly increased in August, rising 0.7% from the previous month despite expectations of a 0.8% fall.

The greenback is likely to end up the week near its two-week high, trading in a range between the 92 and 93 levels.

China's Commerce Minister applied to join the free trade agreement called CPTPP on Thursday.

In 2018, 11 countries, including Australia, Canada, Chile, Japan, and New Zealand, signed the CPTPP.

As China signed the Regional Comprehensive Economic Partnership (RCEP) free trade agreement last year, its entry into the CPTPP would represent a major boost.

Events of the day

Later on Friday, investors will have another chance to test the more bullish sentiment with the release of the University of Michigan's consumer sentiment index, which shocked many investors last month by plunging to a decade-low due to smaller income gains and higher inflation.

Traders are now fully focused on next week’s Federal Reserve meeting amid uncertainty over whether this data will be enough to prompt the central bank to announce a timeline for asset tapering after a tame consumer inflation reading and soft job growth data earlier this month.