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Forex Market Majors Stabilize on Mixed US Retail Data

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Forex Market Majors Stabilize on Mixed US Retail Data
  • 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.

 

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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