North American Summary and Highlights 16 July
Overview - The USD saw a bounce on stronger than expected retail sales data but the gains were largely erased by the close.
North American session
The USD bounced on stronger than expected June retail sales data but the rise was largely erased by the end of the session leaving the USD little changed. EUR/USD fell from 1.09 to a low of 1.0872 before returning to 1.09. USD/JPY rose from near 158.30 to a high of 158.86 before slipping back to 158.40. There were similar moves elsewhere.
US retail sales were unchanged overall but up 0.4% ex autos and by a strong 0.8% ex autos and gasoline. Comments from Fed’s Kugler seeing rate cuts later this year may have assisted the USD reversal but the move was underway well before her comments. Canadian CPI was in line with expectations, slipping back to 2.7% yr/yr reversing an increase to 2.9% seen in May.
European morning session
The USD was slightly softer through a quiet European morning session. EUR/USD drifted up around 15 pips to 1.09, and USD/JPY fell back around 30 pips to 158.40. There were similar USD losses elsewhere and not much cross movement, although EUR/CHF edged up in line with EUR/USD.
News was thin, with only the German ZEW survey and the Q2 EU bank lending survey of note. The ZEW survey was broadly in line with expectations although both sentiment and current conditions slipped a little lower. The bank lending survey showed a reported increase in demand for both housing loans and consumer credit for the first time since 2022. This came alongside a further, albeit still moderate, easing in credit standards for home purchases. But consumer credit standards rose a little further and firms faced a further rise in credit standards, albeit much more moderate. Otherwise, although company loan demand fell far less than in the previous (April) BLS, it is still clearly weaker than average but with increased national divergences.