A bad retail sales report makes a September hike basically impossible (if anybody was expecting it). Headline retail sales were flat, core sales are down 0.3%, the control group is flat and also ex gas/autos is down. All are below expectations and small upwards revisions do not compensate. Also, PPI numbers all fall short of expectations.

The US dollar is falling across the board, with no exceptions. Consumption is key in the US and this is bad news. In terms of market mood, it goes against the good vibes from the excellent NFP last week.

The US was expected to report a rise of 0.4% in retail sales in July after 0.6% in June (before revisions). Core sales were predicted to rise 0.2% after +0.7%.

The US dollar returned to its balance after a week that saw mood swings in the aftermath of the positive NFP.

Retail sales, PPI data

• Retail sales: previous +0.6%, expected +0.4%, actual: 0%, previous revised to 0.8%
• Core retail sales: prev. +0.7%, exp. +0.2%, actual: -0.3%, previous revised to 0.9%
• Retail control group: prev. +0.5%, exp. +0.3%, actual: 0%
• Retail ex gas/autos: prev. +0.7%, actual: -0.1%, previous revised to 0.8%
• PPI m/m: prev. +0.5%, exp. +0.1%, actual: -0.4%.
• Core PPI m/m: prev. +0.4%, exp. +0.2%, actual: -0.3%
• PPI y/y: prev. +0.3%, exp. +0.2%, actual: -0.2%
• Core PPI y/y: prev. 1.3%, exp. 1.2%, actual: 0.7%.

Currencies react to retail sales

• EUR/USD was confined to a narrow range, albeit traded somewhat higher thanks to good German GDP. EUR/USD now touches 1.12. Will this attempt work?
• GBP/USD remained somewhat depressed after slipping back below 1.30. Cable leaps above the line and hits 1.3020.
• USD/JPY was around 102 and slips to 101.30.
• USD/CAD traded under 1.30 thanks to soaring oil prices. 1.2940 is the new level.
• AUD/USD was under 0.77 as the “risk” atmosphere waned. The line is reconquered.
• NZD/USD finally digested the RBNZ cut and was around 0.72 and rises to 0.7240.

We still have a big consumer related release ahead.