Trump and U.S Retail Sales Puts the USD in the Spotlight

Earlier in the Day:

It was a particularly busy economic calendar through the Asian session this morning and of significance, with the stats focussed on China, while the markets looked on to the Russia – U.S Summit that is unlikely to be a dull affair.

On the stats, 2^nd quarter GDP numbers along with June fixed asset investment, retail sales and industrial production figures were released out of China through the Asian session.

• In the 2^nd quarter, the Chinese economy grew by 1.8%, quarter-on-quarter, which was better than a forecasted 1.6%, following 1.4% growth in the 1^st quarter, while year-on-year, growth slowed from 6.8% to 6.7%, which was also in line with forecasts.
• Fixed asset investment also came in line with forecasts, rising by 6% year-on-year, following May’s 6.1%.
• Retail Sales impressed in June, rising by 9%, which was better than a forecasted 8.8% rise, following May’s 8.5% increase.
• Industrial production was the in the red on the record card, with production rising by 6%, which came up short of a forecasted 6.5% increase and well short of May’s 6.8% rise.

The Aussie Dollar moved from $0.74217 to $0.74164 upon release of the figures, before easing to $0.7413 at the time of writing, down 0.15% for the session.

Elsewhere, the Japanese Yen was down again against the Dollar, falling 0.1% to ¥112.49 against the Dollar, while the Kiwi Dollar gave up larger gains from earlier in the day, up 0.15% to $0.6763, with slower growth in China pinning the Kiwi back in the session.

In the equity markets, with Japan on holiday, it was left to the Hang Seng, CSI300 and ASX200, with China’s stats through the morning weighing on market risk appetite, as year-on-year GDP figures and June’s industrial production numbers provided further evidence of a slowdown in the Chinese economy, with market sensitivity to the numbers heightened as the trade war wages on. At the time of writing, the ASX200 was down 0.38%, with the CSI300 and Hang Seng down 0.77% and 0.57% respectively.

The Day Ahead:

For the EUR, it’s a relatively quiet day and a quiet week ahead on the data front, with stats through the morning limited to May trade figures out of the Eurozone.

Following a widening to Germany’s trade surplus, there may be some support for the EUR, though trade figures are giving the markets some degree of anxiety this summer, the U.S President likely to be scouring through any imbalances, which could leave the EUR at risk should the numbers impress and catch Trump’s eye.

At the time of writing, the EUR was down 0.03% to $1.1681, with this morning’s stats out of China and the U.S – Russia Summit driving risk appetite and the EUR ahead of this morning’s trade figures that may well be brushed aside by the markets.

For the Pound, it’ a quiet day ahead, as the markets look back to Trump’s hand holding of the British Prime Minister and of less significance to the global financial markets, but certainly grabbing the headlines, the meeting with the Queen of England…

It may be a quiet day, but it’s a busy week for the Pound, with employment, inflation and retail sales figures due out, the combination of which could ultimately give the green light to an August rate hike by the BoE.

While there are no stats out through the morning, hopes of a spectacular trade deal with the U.S after Britain leaves the EU will be a positive for the Pound, though a parliamentary vote later today will keep pressure on the British PM, with a vote on changes to the PMs plans on customs in focus. Both Boris Johnson and Davis are scheduled to speak during today’s parliamentary debate, which could get interesting.

At the time of writing, the Pound was up 0.09% to $1.3234, with sentiment towards the UK economy and the success of Trump’s visit to the UK providing support at the start of the week, though there are plenty of possible speed bumps that could to pull the Pound into the red through the week.

Across the Pond, economic data out of the U.S includes May business inventory numbers, June’s retail sales figures and July’s NY State manufacturing PMI figures.

While we will expect the retail sales figures to be the key driver through the session on the data front, concerns over the U.S economy being derailed by the ongoing trade war will have increased sensitivity to manufacturing sector activity, bringing business inventory and, more importantly, the PMI numbers into the mix.

Outside of the stats, the U.S – Russia Summit and chatter on trade tariffs will also be in focus, with the stats likely to have limited relevance should the markets get hit with more threats from the Oval Office and Beijing.

At the time of writing, the Dollar Spot Index was up 0.05% to 94.728, with Trump and today’s retail sales figures likely to be the key drivers through the session.

For the Loonie, there are no material stats scheduled for release out of Canada, leaving direction through the day hinged on market risk appetite and sentiment towards NAFTA, which has found little attention as the U.S administration focuses on China.

At the time of writing, the Loonie was up 0.02% to C$1.3158, with trade war chatter and market risk appetite to provide direction through the day, a return to C$1.30 levels on the cards should the U.S and China return to the negotiating table and make progress in averting an all-out trade war.