- US Retail Sales Grow Slower Than Expected
- Easing Coronavirus Restrictions Boost GBP Markets
- Biggest USD Sell-Off Since 2010
Retail sales data in the US came in lower than expected on Friday. The figures for July did show a slight increase though this was significantly below the numbers forecast. This has led to sideways trading in many major forex market pairs including the EUR/USD as traders consider their next moves. Meanwhile in the UK, Sterling continues to improve on news that some restrictions may be eased in the coming days. This all comes amid the worst week in a decade for the US Dollar index which is trading just above 93.00 at the time of writing.
Mixed Retail Sales Data a Stumbling Block for US
Forex trading in the major currency pairs continues to be steady today with no strong direction taken one way or the other. This comes in a large part due to the mixed retail sales data released by Washington today. This data noted a 1.2% increase in July. The figure is well below the 2.3% that had been expected. This would point to a recovery slowdown even as the S&P 500 bids to reach new heights.
There has still been no further progress with a proposed second stimulus deal in the country. Both sides are at loggerheads over the terms of a new deal as congress heads for a recess which could see the talks drag on for several weeks. This level of uncertainty leaves an already weak US Dollar, and other sectors of the economy in limbo.
Sterling Shows Strength as Reopening Moves Closer
The Pound has taken advantage of a weak US Dollar and increasing optimism over a successful Brexit negotiation to strengthen further. The currency has reached a several month high against the JPY breaking through the 140.00 threshold, and has also pushed beyond 1.31 in US Dollar trading. Sterling traders have been boosted further by hopes that domestic lockdown measures could be eased.
Forex brokers have also noted an uptick in support for the GBP as the chief negotiator for the UK in the ongoing Brexit negotiations, David Frost, commented on Thursday that he had high hopes of reaching a deal in September. This would undoubtedly push the Pound higher if a deal which has been stagnating for months, could be concluded.
US Dollar Index Continues to Spell Trouble
Despite the improving unemployment claim numbers in the US which came in under 1 million for the first time during the pandemic this week, the US Dollar continues to weaken against major world currencies. This is reflected in a very lacklustre US Dollar Index which has failed to gain any upward momentum and is headed for another losing week, the longest such streak since 2010.
There now exists genuine and credible fear of a US Dollar collapse with the ongoing COVID-19 pandemic taking its toll, and numbers failing to rebound on expectation. This has led many traders away from the Dollar toward more traditional safe havens like the Japanese Yen, and Swiss Franc.
Forex Market Majors Down Further Amid Fiscal Uncertainty
- EUR/USD at Monthly Low as Fed Remain Hesitant
- Pound Falls Further on Negative Rates Possibility
- US Jobless Numbers Drop Lower Again
The EUR/USD continued to fall on Thursday. Hitting its lowest point in one month, the market seems to be heading on a downward trajectory as there was no rush to further stimulus despite a grim economic outlook from the Fed. The GBP also continued to struggle lower on news from the Bank of England that negative rates remain under consideration. In the US meanwhile, although the number of jobless claims fell more than expected, the total still remains challengingly high.
Dollar Strength Returns as Euro Falls
Demand for the US Dollar has rebounded slightly todays as the Euro has continued to slip back against the currency. The pair has now reached its lowest point in a one month period with forex brokers projecting a further battle ahead. This comes in the wake of the FOMC meeting, and comments from chief of the Federal Reserve Jerome Powell that although more fiscal support may be needed, nothing in particular seems to be forthcoming from the Fed at this moment.
The Fed reluctance to add any more stimulus, coupled with the poor retail sales figures showcased for August in the US would appear to have pushed those forex trading the markets, back toward the relative safety of the Dollar. Though this may be no bad thing for the struggling Greenback, it leaves the Euro in a tentative position with many already seeing it as largely overbought.
Brexit Trade Hope Balances Struggling Pound
News that the Bank of England are looking into the possibility of setting negative interest rates to stimulate the economy of the UK made sure that Sterling started off the day with added woes. The Pound bounced back slightly though on news that a Brexit trade deal may not be as dead in the water as was previously expected.
Though the EU and UK have both been at loggerheads during the trade negotiations and with no positive resolution in sight, news emerged today that the UK has offered some concessions on fisheries to the EU. This has prompted the EU chief negotiator, Michel Barnier to say that he still believes a deal can be done. This though, would still appear a long way from certain.
US jobless Claims Slightly Lower Than Expected
Initial unemployment claims continued to trickle down for the last week in the US. Coming in at 860,000 the number of new claims slightly beat estimates, with the number of continuing claims also falling. This number still remains staggeringly high though at 12.6 million.
The general consensus is, that while the numbers are continuing to fall slowly, indicating that more and more people are getting back to work, the numbers remain too high, and falling at too slow a pace to really boost the economy. This is another factor which has backed a push back into the US Dollar as much of the road ahead remains still unknown.
Strong Chinese Data Helps Boost Forex Market Mood
- Positive Chinese Retail Data Reported
- Global Markets Boosted on Positive News
- GBP Stalls Again on Unemployment Numbers
The forex market, and others around the world have been given a strong boost today with the release of positive retail spending numbers from China. The numbers reported show the first increase of retail sales on the previous year. This has given a timely boost of strength to equity markets in China, Europe, and the US as well as some of the major forex pairs. The only major currency which has not been boosted in the right direction today is Sterling as it continues to struggle under the weight of Brexit woes.
First Chinese Retail Sales Boost
For the first time this year, monthly retail sales in China outpaced figures from the previous year. August numbers showed a 0.5% increase on those from the same period last year. This shows that China is getting back to regular life, and spending habits. This represents a sharp turnaround on numbers that had been lagging 8.6% below the previous year based on the first eight months.
These key numbers not only provide confidence to the Chinese markets, but a confidence which radiates through the economic world, such is the power of Chinese consumers. Some market sectors in particular showed a notably sharp increase, such as auto sales which were up almost 9% for the month. Industrial production numbers also increased an impressive 5.6% compared to the same month last year.
Timely Boost for Markets Worldwide
Those forex trading the different markets around the world welcomed the positive news from Beijing with open arms. This was noted on markets not limited to forex. The Euro moved toward 1.19 despite upcoming Fed policy decisions to be announced Wednesday. The currency was buoyed not only by the Chinese data, but also similarly positive figures from the German ZEW survey as confidence returns slowly to the bloc.
Meanwhile, as the US Dollar toils in weakness, equity markets in the US opened strongly. This follows similar movements in both China, and across Europe. The Dow Jones opened up more than 150 points while other major indices followed suit. Major names like Apple, Microsoft, and Amazon all gained, while Tesla has bounced back in huge style, adding 17% since the start of the week.
Sterling Bucks the Positive Trend
Forex brokers, while noting an increase in activity for other major pairs, found the GBP still lagging behind despite the all-round market positivity of the day. The Pound although picking up slightly, has refused to break by through the 1.30 mark even amid a continuingly weak US Dollar.
Trading appear cautious as the unemployment rate in the UK rose to 4.1% although jobless claim numbers were below expected. Still the greatest weight on the currency is the hugely controversial Brexit bill. This has seen the EU threaten legal action, and placed a great degree of uncertainty around both Brexit, the GBP forex market, and wider UK economy.
Forex Market Stays Low Against USD on Mixed Data Release
- Euro Falls Back on Core Inflation Numbers
- GBP Hits Lows Despite Positive Data
- Markets Look to Bounce Back to End Week
Both the Euro and Pound started the session on Friday strongly, but fell back following the release of US inflation data which can in slightly higher than expected for August. Sterling in particular has been struggling to gain momentum despite more promising data released by the UK. The forex market appears to be trading largely on the domestic struggles of the Brexit trade debacle. US market futures are also trading positively as they try to rebound again following a big losing day on Thursday.
US Core Inflation Higher Than Expected
Numbers released today in the US show that core CPI inflation came in slightly higher than analysts had expected at 1.7% versus 1.6%. The core number removes volatile food and energy prices from standard CPI inflation. This has also risen on a yearly basis despite dropping from 0.6% to 0.4% for August on a monthly basis. The EUR/USD forex trading market dropped back on the news having previously pushed close to the $1.19 mark.
The move also follows on from comments yesterday made by ECB President Christine Lagarde. She stated that the rising Euro will be closely monitored. The currency has been boosted in recent weeks not only by a weakening US Dollar but also by the fact that European economies have started to bounce back well, in line with expectations.
Sterling Struggle Continues Despite Strong Numbers
The UK released a strong set of numbers for July which would indicate that the domestic economy there is also rebounding well. Industrial production, manufacturing production, and monthly GDP numbers all came in very positive. This did nothing to strengthen the Pound though as forex brokers noted a continued caution around the currency which dropped to multi-week lows early in the day.
These lows have largely been caused by traders who have essentially ignored the economic data and instead focused on the ongoing Brexit dilemma which the UK finds itself in the middle of. The EU has taken a very hard line on British attempts to pass a bill which would significantly alter their withdrawal agreement, threatening legal action. This ongoing saga continues to undermine the value of the Pound and increase caution among forex traders of the pair.
Strong Market Reopening as Wall Street Bounces Back
It has been something of a rollercoaster week for equities markets. A sharp pullback was followed by a rebound on Wednesday, but major markets were down strongly again yesterday. As the opening bell rang again today though, these major names particularly in tech, have attempted to stage another fight back.
Both the S&P 500 and the NASDAQ reopened strongly with gains of close to 1%. This follows a huge sell-off which has seen the NASDAQ fall of 10% in just three trading days. Although a correction had been largely anticipated following the huge run up of late, traders will be hoping to finish the week strongly and avoid back to back weekly losses for the S&P 500.