Wednesday, August 12, 2015

Core EZ states’ inflation reports will be watched today | … but US retail sales later have greater potential to impact Forex

Latest inflation figures, known as the Harmonised Index of Consumer Prices (HICP), from several large Eurozone member states will be out later this morning. The countries concerned include Germany, France and Spain. A lower than expected figure, especially in Germany, can be expected to impact to the downside for the Euro, as it will increase the incentive for the ECB to further accelerate easing measures, which would be a negative for the Single Currency. It will be interesting to see if the most recent drop in the price of oil has yet filtered through into these figures.

US retail sales

The last reading for retail sales in the USA, for the month of June and released last July 14th, showed “a monthly annualized growth rate of -3.40%, compared to an average annualized growth rate of 4.24%”. This consistent recent underperformance in retail sales Stateside has been something of a puzzle to many market watchers. Other economic indicators, such as employment and wage reports, as well as a drop in the price of energy related products due to the fall in oil prices, should, at least in theory, have provided more money for consumers to spend.

It would appear that personal experiences following the global financial crisis are still very much remembered, and those same consumers are saving instead of spending. Today’s report should give an update on this.


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