US consumer spending continued to ebb in the second quarter as June marked the second month of decline in retail sales. Consumer purchases were down 0.5% for the month, following a 1.1% slide in May. The June figure came in below expectations. Excluding auto sales from the equations, sales were down 0.1%. The headline retail sales figure includes sales of gasoline at filing stations, which fell 2% in June as prices for gasoline fell during the month. Excluding autos, gasoline and building materials, which is the measure used when calculating GDP sales rose 0.2% after a 0.2% decline in May.

The high unemployment rate and anxiety around the financial turmoil in Europe, which has caused a dip in US stocks, has made consumers more cautious. Weaker than expected growth in hiring by private companies is also to blame in weighing on job prospects pressuring consumer spending.

So, while June's data will confirm the slowdown in the US recovery and will weigh on investor sentiment, strong 2nd quarter earnings helped to mitigate some of the effect in Wednesday's trading session in US equities.

The recent run of weak data from the US, not just in consumer spending, but in housing and employment will mean that investors will scrutinize the FOMC meeting minutes that are set to be released at 2PM. The Fed has had to turn less hawkish as a result of the weakening economy and if there is mention of more unorthodox measures to prop up the economy with further monetary stimulus it could have a strong impact on markets.

That would mean policy makers believe that the US recovery slowdown - which was expected as government stimulus is withdrawn - would be more pronounced than anticipated. If the effect is worries about the global economy than the greenback could benefit as a safe haven. However if concerns focus primarily on the US economy then the greenback could suffer as the fundamentals mean the Fed will keep interest rates at their record low rates for longer.

The Euro was higher today as Portugal held a successful auction of government debt, which helped to continue to alleviate concerns over the euro-zone debt crisis. The EUR/USD moved above a key level of $1.27 in mid NY trading.