The US dollar sold off briefly against its counterparts on Friday when the retail sales report missed expectations. Headline consumer spending was flat while the core version of the report showed a 0.3% drop. PPI readings were also below consensus, with a 0.4% drop in the headline figure and a 0.3% decline for the core reading. The preliminary consumer sentiment index was also lower than expected at 90.4, hinting at weaker consumer spending later on. Only the Empire State manufacturing index is due today and a rise from 0.6 to 2.1 is expected.
The euro took advantage of dollar weakness on Friday but was off to a weak start this week, even though most banks in the region are closed for the holiday. Germany’s preliminary GDP beat expectations with 0.4% growth while Italy’s flash GDP was weaker than expected with its flat reading. The region’s growth figure stood at 0.3% as expected.
The pound was the weakest of the bunch, as traders likely positioned ahead of this week’s top-tier UK releases. Construction input was also weaker than expected with a 0.9% decline while the Rightmove HPI showed a 1.2% fall in house prices. No other reports are due from the UK today but there could be some pricing in ahead of the CPI data due tomorrow.
The franc was barely able to hold on to its recent gains to the dollar as there were no reports to give the Swiss currency a boost on Friday. Today has the PPI on tap and a 0.2% drop in producer prices is eyed, likely to weigh on overall inflation down the line.
The yen slid lower to start the week after Japan’s preliminary GDP reading came in flat for Q2 versus the projected 0.2% expansion. On a less downbeat note, the previous reading was upgraded to 0.5% while the price index beat expectations at 0.8%.
Commodity Currencies (AUD, NZD, CAD)
The comdolls had a mixed performance, as the Aussie and Kiwi lagged while the Loonie held on to its gains. Expectations of a production cut in the upcoming OPEC informal meeting are supporting crude oil prices and the positively correlated Canadian currency for now while Australia and New Zealand might be facing weaker demand for commodity products due to weaker than expected demand from China. Industrial production, retail sales, and fixed asset investment all declined and missed expectations last week.