The US Dollar was the weakest among the major currencies as it extended its decline as Advanced Retail Sales unexpectedly declined in July over concerns of mounting job losses and consumers spending less. The retail sales declined 0.1% against expectations of a rise of 0.8%. The retail sales less the auto component declined 0.6% against an expectation of a rise of 0.1% as the autos were the main beneficiary of the cash-for-clunkers program and consumers did not spend apart from autos. The other important news from the US was the initial jobless claims reading which showed that claims rose 4,000 to 558,000 from the previous revised reading of 554,000 while the total claims till date showed a figure of 6.2 million claims down 141,000 from the previous month.
The Euro and the Pound gained against the US Dollar where the dollar suffered the most during the day in the morning session as GDP reports from Germany and France showed that the Euro Zone is coming out of the recession as the Euro Zone GDP fell only 0.1% in Q1 2009 against the previous drop of 2.5% in Q1 2008. Both the Euro and the Pound continued its gains against the USD after the US economic data which proved bearish for the Dollar as the Euro moved above 1.4300 and the Pound above 1.6600. The Swiss Franc was range bound over weaker economic data as Producer Prices fell the most in 34 years and there are reports of the Swiss Bank intervening to weaken the Franc over risk of deflation as the USD/CHF neared 1.0600.
Despite the positive economic data released from the US last week regarding the manufacturing, housing and employment, the USD remains weak and unemployment looks on its course to 10% suggesting that the economy will still need time to recover as consumers still fear their safety over jobs and spending is at the lows which could halt the economic cycle of growth.
Today the important news would be the CPI reading from the Euro Zone and the US which could prove decisive over the status of the stimulus packages and whether the central banks would review the QE program in their next meetings. Also released would the University of Michigan Consumer Confidence which could help determine the status of the consumer mentality over their outlook of the economy as job cuts continue to rise despite recovery measures.
