Speculation that Japanese companies are bringing back earnings on overseas assets strengthened the yen for a second day against the dollar and the euro.

  • A surprising drop in US retail sales for the month of July dragged the US dollar lower spurring concerns that consumers remain hesitant to increase spending.  US retail sales fell 0.1% last month, after gaining a revised 0.8% for the month of June.
  • The euro took advantage of Germany's gross domestic product expansion of 0.3% in the second quarter.  The EURUSD gained over 100 pips from yesterday's lows and as we enter into the European session the pair is trading around 1.4270.
  • The sterling benefited from reports that both Germany and France unexpectedly grew in the second quarter.  The GBPUSD rallied almost 200 pips and as of 06:00 GMT the pair is trading around 1.6570.
  • In the south Pacific, the Australian and New Zealand dollars touched the highest level since September as Asian stocks gained.  The benchmark interest rates of 3% in Australia and 2.5% in New Zealand compared to the almost zero rate in the US and Japan, makes the nation's assets more attractive to investors looking for higher returns.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.4215 with a preference to enter into long positions at 1.4225
  • The GBPUSD pivot point is at 1.6525 with a preference to enter into long positions at 1.6535

Today's calendar and market movers:

  • EU Core CPI year on year expected to remain unchanged at 1.4%
  • US Core CPI month on month expected to drop to 0.1%
  • US Industrial Production month on month expected to rise to 0.4%
  • US Prelim University of Michigan Consumer Sentiment expected to rise to 69.1

Now onto Stocks:

  • US equities rose on Thursday on better than expected earnings by Wal-Mart Stores countered disappointing results from retails sales and jobs.  The Dow gained by 0.4%, the S&P by 0.7% and the NASDAQ by 0.5%.
  • As of 06:20 GMT the Nikkei is at 0.8% and the Hang Seng at -0.8%