The US dollar may have been the weakest of the majors, but most of the losses occurred during the European trading session. Indeed, the greenback actually started making headway following a flurry of US economic releases at 8:30 ET that triggered yet another bout of risk aversion, though the Japanese yen was arguably the bigger beneficiary. Looking to the data on hand, US advance retail sales slipped 0.1 percent in July, missing forecasts for a 0.8 percent increase, while sales fell 8.3 percent from a year earlier. A breakdown of the report shows a 2.4 percent rise in sales of motor vehicles and parts, thanks to the US government’s “cash for clunkers” program, but beyond that factor most other components fell, including building materials (-2.1 percent), gasoline stations (-2.1 percent), and electronics & appliance stores (-1.4 percent). All told, consumer spending habits remain lackluster, suggesting that last week’s surprisingly strong non-farm payrolls report may have been a misleading sign of an economic turnaround in the US.
Other evidence of this comes from initial jobless claims, which rose by 4,000 during the week ending August 8 to 558,000, indicating that some of the improvements we saw in July may have started to deteriorate once again in August. In other US news, import prices fell by 0.7 percent in July led by petroleum costs, while business inventories dropped 1.1 percent in June thanks to a 0.9 percent rise in total sales that brought the inventory/sales ratio down to 1.38 from 1.41.
On Friday, the preliminary reading of the University of Michigan’s consumer confidence index is forecasted to show a rise to 69.0 in August from 66.0, which would be supportive of claims that the US economy is showing signs of recovery. Indeed, based on the latest US non-farm payrolls results, the pace of job losses has slowed markedly, which may help to boost investor sentiment. On the other hand, the latest retail sales results may indicate that NFPs were somewhat deceiving. That said, the major issue we want to point out with this report is that the official time of release is 10:00 ET, but it typically hits the wires at 9:55 ET, which can exacerbate any surprise factor from the actual results.
[B]Related Article[/B]: US Dollar Weekly Trading Forecast, Japanese Yen Weekly Trading Forecast