U.S. retail sales in July increased by 0.5%, the most in...
U.S. retail sales in July increased by 0.5%, the most in four months. June saw an increase in 0.1% and May say a decline of 0.2% in retail sales. Nine of the 13 major categories that comprise the retail sales figures showed a gain in July. The most gains were in electronic stores, furniture retailers, auto dealers and service stations. This positive release follows the better than expected Non-Farm payrolls data released last week (117K jobs created) and the positive unemployment numbers released yesterday. U.S. stock markets have opened higher on account of this positive number.
Later on today, we will have the preliminary University of Michigan consumer sentiment data. The number has come below expectations for the last two months. New York Fed President William Dudley will be speaking today. We will be waiting to hear his comments on the state of the economy in light of the dissent seen in this week’s FOMC statement. Narayana Kocherlakota, one of the Fed presidents who dissented earlier released this statement a few minutes ago: “I can summarize my reasoning as follows. I believe that in November, the Committee judiciously chose a level of accommodation that was well calibrated for the prevailing economic conditions. Since November, inflation has risen and unemployment has fallen. I do not believe that providing more accommodation—easing monetary policy—is the appropriate response to these changes in the economy.” There were three dissents in this week’s FOMC statement, a rare occurrence.
In European markets, the indices are up for the day with the French CAC 40 up 4%, the Italian MIB index up 4.5% and the Spanish IBEX 35 up 4.2%. Today is the first day of short-selling bans in these three exchanges and so far it looks like the ban is having its intended effect of stabilizing the markets. However critics of the ban say this is ineffective in the long run and are not addressing the real issues in Europe.
We have been watching the EUR/USD, EUR/GBP and the GBP/USD because they have been trading in range for the past couple of weeks. Trading these pairs is a scenario of weak economy vs. weaker economy and none of these economies are likely to emerge strong anytime soon. The EUR/USD has a formed a range between 1.4082 and 1.4450. The GBP/USD has been trading in a range between 1.6110 and 1.6480. A range is valid until the currency pair breaks out. As we can see, the pairs have been consolidating, hence a break out is near. A break above the resistance or a break below the support in the EUR/USD and GBP/USD levels we have identified above, will signal that range is no longer valid.
Eugene Ross, Analyst
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