Daily Report: EUR/USD, GBP/USD, USD/JPY And AUD/USD : July 16, 2013

The U.S. Dollar declined following a rather unexpected report on Retail Sales which showed that consumers spent half of what economists had forecast for the month of June. Speculators believe the data is likely to support the Federal Reserve’s decision to adhere to the current level of stimulus. According to the Commerce Department, Retail Sales climbed a mere 0.4 percent after having posted an advance of 0.5 percent in May, suggesting that spending won’t contribute much to second quarter Gross Domestic Product. Core Retail Sales, which do not include the sale of vehicles, were flat. Other releases did however indicate that Manufacturing in the New York region improved this month. The Empire State Manufacturing survey showed a hike from 7.84 to 9.46. Meanwhile, the greenback strengthened versus the Yen following the announcement of positive metrics out of China. Elsewhere, in the commodities market, Gold prices rallied after early reports showed that Retail Sales failed to meet forecasts, denoting that the U.S. economy may be losing momentum. The precious metal’s price remained steady throughout the day, which analysts believe was due to the fact that not all market traders believe the U.S. central bank will reduce stimulus, especially after Fed Chairman Ben Bernanke reiterated that any cuts to monthly asset purchases may not come until the end of 2013. Gold Futures for August delivery settled at $1,283.55 a troy ounce on the Comex Division of the New York Mercantile Exchange.

The Euro declined against the greenback after the U.S. currency had a chance to rebound following surprising Retail Sales reports. This came about as market investors increased speculation the Federal Reserve may still opt for scaling back on stimulus despite Monday’s lackluster data. Today, investors will shift their focus to the Euro region where Germany will issue its much awaited Economic Sentiment report. The British Pound dipped for a second day against the U.S. currency in anticipation of the release of the minutes from the recent Monetary Policy Meeting held by the Bank of England. The minutes are expected to reveal how the new Governor, Mark Carney, voted in regards to extending quantitative easing. The Sterling had dipped prior to the news on U.S. Retail Sales metrics, but it recouped its footing soon thereafter; it remained more or less unchanged versus the Euro as a publication showed that Home Sellers in the U.K. increased their asking prices to record highs.

The Yen fell against the greenback amid speculation the U.S. central bank may cut back on the level of stimulus while the Bank of Japan stated it would continue to adhere to the current easing measures. The Yen remained under pressure despite a release out of China which confirmed that its economy expanded in the second quarter of this year.

Lastly, in the South Pacific, the Australian and New Zealand Dollars advanced against their U.S. trading peer subsequent to positive domestic releases and news which confirmed that China’s economy grew during the second quarter of 2013.

EUR/USD-Euro Trades Mixed After Retail Sales Release
The Euro traded mixed after advancing versus the greenback following the release of lower than anticipated Retail Sales figures out of the U.S. The metrics denoted the biggest drop since June of 2012, yet they weren’t influential enough to prompt speculators to stay away from opening positions with the U.S. currency. The Euro managed to recoup despite the ongoing political turmoil in Portugal, but it soon settled lower against the greenback. Investors now wait for the release of Consumer Price Inflation out of the E.U. and the much anticipated Business Sentiment data from Germany.
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GBP/USD-Home Prices Hit Record
The British Pound showed slight fluctuations against the U.S. Dollar but it erased previous losses as the U.S. issued disappointing Retail Sales figures. The Sterling remained supported as a release by the property operator Rightmove Plc indicated that House Prices rose for a seventh month and reached an average of 253,658 Pounds, showing an increase of 0.3 percent. Meanwhile, market investors are anxiously waiting for the minutes from the Bank of England’s recent Monetary Policy Meeting, which are expected to show how the new Governor, Mark Carney, voted. Analysts believe that if the minutes reveal that he voted for added stimulus, the Sterling may decline.
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USD/JPY-Yen Dips Despite Thin Trading
The Yen weakened against the U.S. Dollar in thin trading, as the markets in Japan were closed for a holiday. The Japanese monetary unit slipped for a second consecutive day versus the greenback as the Bank of Japan indicated its plans to continue with the current asset purchasing program. The Yen remained low following reports out of the U.S. which confirmed that Retail Sales, not including automobile sales, for June plunged to the lowest since summer of 2012; this depressed Inflation forecasts and pushed the greenback further to the downside. The Yen did not benefit from metrics out of China and continued to trade low even though they revealed that Gross Domestic Product grew 7.5 percent in the second quarter of 2013, and Retail Sales climbed from 12.9 in May to 13.3 percent in June.
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AUD/USD- Aussie Benefits From China’s Growth
Australia’s Dollar gained following a release out of China, its biggest trade partner. This report showed that the world’s second biggest economy expanded 7.5 percent in the months between April and June, matching predictions by economists. Separate announcements revealed that Chinese Retail Sales increased on a year on year basis and went from 12.9 to 13.3 percent; Industrial Production, on the other hand, dropped from 9.2 to 8.9 last month. In Australia, domestic news confirmed that Automobile Sales went up by 4.0 percent in June.
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Today’s Outlook
Today’s economic calendar shows that the U.K. will report on CPI and Core CPI, PPI Input and Output, and the House Price Index. The Euro region will issue figures on CPI, Core CPI, Trade Balance and the ZEW Economic Sentiment. The U.S. will also reveal CPI and Core CPI, as well as Industrial Production. Japan will publish the minutes from the Monetary Policy Meeting.