The U.S. Dollar is trading positive ranges to start this morning following the release of improved Retail Sales figures that were unexpected.
Overview
While economists and traders forecast numbers that would suggest tough times for the American consumer, the actual data marked a recovery for June and previously unseen for May. Instead of a contraction, Retail Sales for the month was flat while up 0.8% when excluding energy costs. With consumption staying resilient, the economic performance of the U.S. as a whole looks better than that of other regions.
In China, economic growth numbers failed to impress with the Q2 Gross Domestic Product output coming in at 4.7% vs. 5.1% expecting, representing the weakest reading since Q1 2023. Additionally, Chinese leadership will need to worry about what would be coming with a Trump administration in terms of tariff increases. Some economic models estimate that the Chinese growth rate could be halved if a 60.0% tax on all imports is indeed applied as proposed.
While the future may give some concerns to trade, markets seem to be more concerned about how soon the Federal Reserve will choose to cut interest rates. After commentary from Fed Chairman Jerome Powell explaining that U.S. indicators have indeed softened, traders are now fully pricing in a cut for September 18th. Other Fed officials may chime in throughout the remainder of the week. Tomorrow, we get Industrial Production and other data for manufacturing and jobless claims on Thursday.
What to Watch Today…
- Industrial Production Wednesday
- ECB Meeting Thursday
- Monex USA Online is always open.
EUR ⇓
The Euro dropped after navigating around its strongest levels over the Buck in four months as traders look ahead to a more stimulus-driven European Central Bank. With the economic recovery for countries moving slower than desired, bets have increased that on Thursday’s meeting the ECB will telegraph an interest-rate cut for September. Inflation will be key as it has proven stubborn and we will get a look tomorrow when released in the form of Consumer Price Index for June.
CAD ⇓
The Canadian Dollar weakened to its lowest point since the start of the month, with disinflation accelerating ahead of the Bank of Canada’s meeting on July 24th. June CPI revealed deflation at (-0.1%) instead of an increase. With the economic picture overall looking like it can use aid, the BOC is expected to continue on its rate-cutting path and inflationary pressures have gone away to make officials comfortable
