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After Inflation Indicators, Focus Shifts to the U.S. Retail Sales Report
This week, the U.S. PPI (Producer Price Index) and CPI (Consumer Price Index) inflation indicators were in focus, but the market has regained relative calm. The stock market is holding steady, and the USD/JPY pair is fluctuating slightly around the 147 yen level. The EUR/USD is maintaining its strength above 1.10, while GBP/USD is seeing mixed trading around the 1.28 level, reflecting a slight overall trend towards dollar weakness. The market has recovered from the panic seen at the beginning of last week, and position adjustments appear to be underway in anticipation of next week’s Jackson Hole Symposium.
Today, there are several U.S. economic indicators that are drawing market attention. The New York Fed Manufacturing Index, the Philadelphia Fed Business Outlook Survey, and especially the U.S. retail sales for July will be closely watched. Unless these results deviate significantly from market expectations, it is unlikely they will have a major impact on the rate cut outlook for the September FOMC meeting. However, market expectations regarding whether the rate cut will be 25 or 50 basis points could intensify.
In particular, U.S. retail sales for July are expected to rise by +0.4% month-over-month and +0.1% excluding autos. The degree to which these results match expectations could influence the movement of the U.S. dollar.
While today’s U.S. dollar movement is expected to be relatively calm, the broader trend is likely to continue leaning towards selling. It will be important to pay close attention to the U.S. dollar’s movement following the retail sales report.
