Talking Points

  • UK Retail Sales Data Eyed for Signs of Follow-Through on Jobless Claims Drop
  • Eurozone CPI Likely to Pass Quietly as Debt Crisis Dominates ECB Outlook
  • Thin Volumes May Cloud Risk Trend Implications of Philadelphia Fed Report

The economic calendar is relatively quiet in European hours. UK Retail Sales figures are in focus, with expectations calling for receipts to rise 2 percent in July compared with the previous year. Traders will look to the outcome to gauge follow-through on better-than-expected Jobless Claims data over the same period. An upside surprise may offer a near-term boost to the British Pound, although if yesterday's dynamic continues to hold then follow-through may prove limited as prices struggle to find directional conviction.

Separately, the final set of July's Eurozone CPI figures is expected to confirm the headline inflation rate at 2.4 percent, matching the flash estimate released two weeks ago. The outcome is likely to pass with little fanfare given its limited implications for the direction of near-term ECB monetary policy. Indeed, traders are far more concerned with the central bank's forthcoming "non-standard" measures aimed at quelling the Eurozone debt crisis than with price growth trends, particularly in light of relative stability on the inflation front over recent months.

Later in the session, the spotlight turns to the Philadelphia Fed manufacturing activity gauge. Economists expect a narrow improvement in August, with the index rising to four-month high at -5.0 from a print at -12.9 in the prior month. A disappointing print on the analogous Empire Manufacturing metric released yesterday seemingly helped advance Fed stimulus hopes and nudged the S&P 500 higher, helping to boost the stocks-linked commodity-bloc currencies. With that in mind, an improvement may produce the inverse scenario this time around.

Importantly, yesterday's currency market response proved uneven as the US Dollar advanced against its major European counterparts and the Japanese Yen, which is unusual if QE3 bets were indeed the driver behind risk trends. On balance, the inconsistency (as well as the recent slump in volatility) most likely reflects ebbing trading volumes. Indeed, turnover in FX futures tracking the major currencies has declined substantially over the past several weeks. That means finding clear trends in whatever happens over the coming 24 hours will probably be challenging at best.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

22:00

NZD

ANZ NZ Job Ads (MoM) (JUL)

0.7%

-

-1.4%

22:30

NZD

Business NZ PMI (JUL)

49.4

-

50.0 (R-)

1:00

AUD

Consumer Inflation Expectation (AUG)

2.4%

-

3.30%

1:30

AUD

Average Weekly Wages (QoQ) (MAY)

0.4%

-

1.10%

1:30

AUD

Average Weekly Wages (YoY) (MAY)

3.4%

-

4.40%

1:30

AUD

RBA Foreign Exchange Transaction (A$) (JUL)

528M

-

1256M

1:55

CNY

Actual FDI (YoY) (JUL)

-8.7%

-2.5%

-6.9%

4:00

JPY

Tokyo Condominium Sales (YoY) (JUL)

-1.0%

-

16.4%

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

Retail Sales w/Auto Fuel (MoM) (JUL)

-0.1%

0.1%

Low

8:30

GBP

Retail Sales w/Auto Fuel (YoY) (JUL)

1.4%

1.6%

Low

8:30

GBP

Retail Sales ex Auto Fuel (MoM) (JUL)

-0.2%

0.3%

Medium

8:30

GBP

Retail Sales ex Auto Fuel (YoY) (JUL)

2.0%

2.2%

Medium

9:00

CHF

ZEW Survey (Expectations) (AUG)

-

-42.5

Medium

9:00

EUR

Euro-Zone Consumer Price Index (MoM) (JUL)

-0.5%

-0.1%

Medium

9:00

EUR

Euro-Zone Consumer Price Index (YoY) (JUL)

2.4%

2.4%

Medium

9:00

EUR

Euro-Zone Consumer Price Index - Core (YoY) (JUL)

1.7%

1.6%

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2219

1.2335

GBPUSD

1.5600

1.5703

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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