US Dollar Holds Ground

Analisi Giornaliera - 16/08/2017

Upbeat US Retail Sales Lift Greenback

The US dollar is holding onto most of the gains made in the previous trading session after stronger than expected retail sales reignited hopes of another Federal Reserve interest rate hike this year. Investor attention on Wednesday will be focused on the release of the meeting minutes from the Federal Reserve’s July decision which cast doubts on the outlook for further policy tightening.

Dollar Bulls Attempt a Comeback

Retail sales in the United States surged 0.60% in July, easily topping economists' estimate of a 0.40% gain to post their biggest rise in seven months as consumers increased their discretionary spending and bought more cars. An unexpectedly strong reading in an index on New York manufacturing activity added to confidence in the outlook.

The Empire State Manufacturing index climbed 15.40 points to 25.20, its highest level in close to three years. The greenback also gained from a revival in investor risk appetite after fears of an armed conflict between the United States and North Korea continued to ease considerably compared to the prior week. EURUSD is currently hovering around 1.1735, with any break below strong support at 1.1685 potentially unlocking a fresh wave of selling which could push the pair lower.

UK Inflation Holds Steady

Consumer price inflation in the UK surprisingly held steady in July, bucking investor expectations of a renewed rise, while growth in producers' input costs slowed last month. New figures released on Tuesday by the Office for National Statistics showed that annualized consumer inflation remained unchanged at 2.60% in July, defying the consensus forecast of a pickup to 2.70%.

Inflation was kept in check by lower fuel prices, which offset the increasing costs of food and clothing. The core inflation rate, which strips away the volatile food and fuel components, also remained flat on a yearly basis at 2.40%. However, factory gate prices edged 3.20% higher year-on-year in July versus the 3.30% recorded in June, topping analyst projections of a 3.10% rise. It was the lowest producer inflation reading since December of last year. FTSE 100 futures were last trading around the 7365-mark.

Australian Wage Growth Stuck at Record Low

Even with the more optimistic outlook presented by the latest RBA meeting minutes, Australian wage growth languished at record lows during the second quarter, adding to concerns that strain on household budgets could weigh on economic activity. Wages grew 0.50% quarter-on-quarter, in-line with economists' expectations according to government data revealed earlier on Wednesday. On an annualized basis, wages rose by 1.90%.

The Reserve Bank of Australia warned earlier this week that wage growth continues to lag the rate of increase for household debt. The slowdown has contributed to a dip in underlying inflation, which sits below the Central Bank’s target band of 2.00 - 3.00%. Meanwhile, consumers are grappling with sharp increases in utility costs, dampening confidence and forcing individuals to dip into savings to offset anaemic income growth. AUDJPY is currently trying to mount a break above key resistance at 86.900.

Turkish Unemployment Rises

The ranks of jobless individuals in Turkey swelled in May to 10.20% compared with the 9.40% recorded the same period last year. Data from the Turkish Statistical Institute showed that the total number of unemployed people aged 15 years and above soared to 3.20 million during the month, recording a rise of 330,000 from a year earlier.

However, on a monthly basis, the May figures experienced a -0.30% decline from the 10.50% recorded back in April. Turkey's unemployment numbers have been displaying a steady monthly decrease since the start of 2017. Nonetheless, figures have underperformed amid expectations that a government incentive program would lead to a stronger recovery in the labour market. USDTRY is continuing the rising trend from the prior session to currently trade around 3.5380.