Risk appetite was hit by the double whammy of worse-than-expected US advance retail sales and initial jobless claims at 8:30 ET, and while the initial surge in the US dollar and Japanese yen highlights just how resilient risk trends have remained in the currency markets, the nature of the greenback’s reaction was very short-term in nature as evidenced by subsequent reversals in EURUSD. The Japanese yen crosses, on the other hand, had a bit more trouble.
[I]Source: FXTrek Intellicharts
Source: FXTrek Intellicharts[/I]
Looking to the data on hand, US [B]advance retail sales [/B]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 [B]initial jobless claims[/B], which rose by 4,000 during the week ending August 8 to 558,000, pushing the 4-week moving average up to 565,000 from 556,500, indicating that some of the improvements we saw in July may have started to deteriorate once again in August.