We kick off the final day of the working week with a soft data release from the UK with Retail Sales falling more than expected in July after a run of cool and wet weather kept people off the High Street. Data released this morning showed that the volume of goods sold in stores and online fell 1.2% against expectations of a 0.6% decline and follows a 0.6% gain in June. All parts of the index were lower than expected with the figures marking the first time in four months that sales have fallen short of expectations, a worrying sign that may suggest that consumers are struggling under the weight of soaring prices and higher interest rates. Even more worrying is the fact that the data follows higher than expected wage growth suggesting that UK consumers are not spending their hard-earned cash. The pound slipped a touch after the report, dropping to the lower part of the recent range to trade around 1.2725.
The US dollar has fallen a little but is still set for a fifth week of gains, supported by higher US yields. EURUSD remains within its recent well defined trading range, hovering below the psychological 1.09 area seeking direction. USDJPY is consolidating above 145 after data released overnight showed that Japan’s core consumer inflation slowed in July in line with the central bank’s view that upward pressure on prices appears to be easing.
Headlines out of China continue to set the tone for risk appetite with the central bank signaling that more monetary easing is on the cards as the PBoC vowed to “step up macroeconomic policy adjustment.” With the yuan sliding towards its weakest level since 2007, there were headlines of state-owned banks being urged to step up intervention as the central bank delivered its strongest ever pushback against a weaker currency via its daily reference rate.
Have a great weekend and cheer for the Lionesses!
