North American Summary and Highlights 13 August

North American session

US July PPI data was weaker than expected, up 0.1% overall and unchanged ex food and energy, though slightly stronger at 0.3% ex food and energy and trade with trade prices reversing a strong rise in June. The USD slipped on the data and extended losses well into the afternoon, falling by around 0.5% overall.

USD/JPY, which had peaked near 148, slipped from around 147.50 at the time of the data to 146.75. EUR/USD tested 1.10 from 1.0930, while GBP/USD rose to 1.2865 from 1.2780. EUR/GBP edged off its lows while EUR/CHF advanced to .95. AUD/USD rose to .6635 from below .66 and USD/CAD slipped to 1.3710 from 1.3740.  

Before the PPI July’s US NFIB index of small business optimism rose to 93.7, reaching its highest since February 2022, from 91.5, though signals on inflation were softer and there was little market impact.

European morning session

GBP made some gains through the European morning, helped by the UK labour market data which showed an unexpected fall in the unemployment rate to 4.2% in the 3 months to June. The labour market data was otherwise broadly as expected, with earnings growth easing in the 3 months to June due to base effects, while the more up to data HMRC data showed a small rise in earnings growth in July, but still consistent with a gradual decline. Employment growth was a little stronger than expected din the 3 month to June, and the HMRC data also showed a modest rise in July, but the claimant count for July showed a large rise of 135k – the largest since the pandemic. EUR/GBP fell around 25 pips to 0.8535.

Most of the EUR/GBP decline came via a decline in EUR/USD, which lost 20 pips to trade below 1.0920. This decline came before the German ZEW data, which was disappointing, showing a sharp fall in the economic sentiment index to its lowest since January. The USD was otherwise not much changed, making small gains against the JPY and small losses against the AUD.