Daily Report: EUR/USD, GBP/USD, EUR/JPY And AUD/USD : August 15, 2013

The U. S Dollar retreated from previous highs against the majority of its forex counterparts after official reports indicated that Producer Price Inflation remained unchanged for July, while economists had predicted it would increase by 0.3 percent. According to the Labor Department, the reading followed a 0.8 percent advance in June. The lackluster data continued to weigh on the minds of investors who speculated on whether it would prompt the Federal Reserve to refrain from reducing stimulus during the coming months. The greenback edged higher early in the day despite releases from the Euro region denoting growth as well as a retreat from the recession. Gold Futures traded mixed after a release confirmed that U.S. Producer Price Inflation stagnated last month, and Core prices went up. The lackluster numbers raised fresh worries over the future of the country’s monetary policy. Futures for delivery in December settled at $1,322.70 a troy ounce during the morning hours of the American trading session.

The Euro weakened against the U.S. monetary unit before regaining its footing, despite positive releases which revealed that the region’s economy expanded in the months between April and June, after having posted a contraction in the first quarter. Furthermore, Germany and France also announced that their GDP rose more than analysts had previously predicted. Good news out of the Euro-zone prompted the Swiss Franc to slip to the weakest level in four weeks versus the 17-nation currency, as the numbers suggested that the E.U. has finally emerged from its recession. The Franc plunged against the remainder of its peers after Germany and France released Gross Domestic Product reports. The British Pound, on the other hand, rallied for a fourth day versus the Euro as a publication confirmed that the Unemployment Claims in the U.K. fell in July by more than analysts expected. The Sterling advanced versus the U.S. Dollar after the Bank of England issued the minutes from the recent Monetary Policy Meeting, which showed that policy makers were not in agreement on the issue of forward guidance.

The greenback diminished against the Yen, even as it made gains on Tuesday when the U.S. announced an increase in Retail Sales. However, the soft data on Producer Price Inflation weighed on sentiment and on the dollar. On the data front, the price of Japanese imports into the United States declined the most in more than 10 years, signaling that the Japanese government’s efforts to debase the currency and bolster growth are impacting American inflation. According to reports, the prices of computers and automobiles made in Japan have dipped in the last 12 months. In Japan, close advisers to Prime Minister Shinzo Abe indicated that the central bank ought to expand stimulus to avert negative impact that a hike in sales taxes may cause. If the BOJ follows their advice, economists anticipate that the currency may increase in value and perhaps trade above 100 within a brief period of time.

And in the South Pacific, Australia’s Dollar edged higher against the greenback following the announcement of disappointing U.S. Producer Price Inflation figures. The Aussie had slipped versus its U.S. peer despite positive news releases indicating an increase in Consumer Confidence in the South Pacific nation. New Zealand’s Dollar also rallied versus the greenback, especially as domestic reports showed that the nation’s Retail Sales climbed 1.7 percent in the second quarter of 2013. In addition, Core Retail Sales which do not include the sale of automobiles and fuel increased 2.3 percent, which is more than the predicted 1.3 percent hike.

EUR/USD-Euro-Zone Emerges From Record Recession
Wednesday’s releases showed that the E.U.’s economy has emerged from the recession, as France and Germany reported their first period of economic gains. According to the data, the region’s Gross Domestic Product expanded 0.3 percent in the second quarter, after having contracted 0.3 percent in the months between January and March. Furthermore, France and Germany, the two biggest economies in the region, grew quicker than predicted. Despite the fact that Unemployment rose in a number of countries and Southern Europe continues in a slump, with more than half of the youth in Greece and Spain out of work, the Euro region appears to be stabilizing. In Germany, Gross Domestic Product posted an advance of 0.7 percent, while in France the economy expanded 0.5 percent. Despite the strong metrics, the Euro slipped slightly against the greenback during the European trading session. It rebounded after the U.S. issued lackluster Producer Price Inflation numbers that denoted stagnation for the month of July.

GBP/USD-BOE Released Minutes
The British Pound reached session highs against the greenback as Wednesday’s reports indicated that policy makers failed to reach a consensus on forward guidance. The Sterling remained strong as data out of the Office of National Statistics revealed that the number of individuals who filed for Unemployment benefits dipped by 29,200 last month, surpassing forecasts for a drop of 15,000. However, the Unemployment Rate stayed at 7.8 percent in June, thereby meeting expectations. The latter release raised speculation that the BOE may leave the costs of borrowing money at record lows for as long as the Unemployment level stays above 7 percent. The minutes issued by the Bank of England revealed that policy member Martin Weale expressed his desire for stricter measures in order to ensure that low interest rates don’t raise inflation.

EUR/JPY-Euro Dips Before GDP Data
The Euro weakened against the Yen in the early trading hours of the Asian session as investors looked forward to the release of the Euro region’s GDP. Speculators hoped to see solid data indicating the E.U. has emerged from the record-long economic recession. The Yen increased in momentum as Economy Minister, Akira Amari, suggested he is in favor of the Bank of Japan’s plans, while the International Monetary Fund suggested that the government ought to go ahead with the increase in sales taxes in order to reduce the public debt which amounts to double the nation’s GDP. According to the central bank’s officials, its plans include doubling the monetary base to 270 trillion Yen ($2.75 trillion) by the end of next year. The increase would result from an expansion of the asset purchases and from additional purchases of traded stocks and real estate investment trusts. The Euro continued to trade lower against the Yen despite solid reports revealing growth for the second quarter of the year.

AUD/USD-RBA May Not Cut Rates
Australia’s Dollar eased from recent highs against the greenback despite reports indicating that Consumer Sentiment rose; however, the Wage Price Index disappointed as it missed forecasts. According to Westpac Banking Corporation, the index which gauges Consumer Sentiment climbed 3.5 percent in August after slipping 0.1 percent in July. According to economists, the reduction in interest rates has boosted optimism and shows that consumption may go up in the months to come. The Aussie rebounded later in the day after the U.S. announced that its Producer Price Inflation stayed unchanged last month.

Today’s Outlook
Today’s economic calendar shows that the U.K. will release Core Retail Sales and Retail Sales. The U.S. will report on Initial and Continuing Jobless Claims, CPI and Core CPI, the New York Empire State Manufacturing Index, TIC Net Long-Term Transactions, Industrial Production and the Philadelphia Fed Manufacturing Index.