Dollar breaks into a gallop

USDGBP, H1                    

The dollar rallied following the mix of data, where retail sales were better than forecast, import prices in line, and the Empire State index much stronger than expected. EURUSD fell to intra-day lows below 1.1700 from near 1.1740, USDJPY popped to 110.79, from 110.45, and above its 20-day moving average of 110.65 and Cable fell to 1.2845 and below my T2 from last week of 1.2841 for a net gain of +160 pips.

U.S. retail sales bounced 0.6% in July, with the ex-auto component rising 0.5%, both better than expected. Also, the 0.2% headline June decline was revised sharply higher to 0.3%, while the -0.1% May print is now unchanged. The June -0.2% ex-auto print was nudged up to 0.1%, while the -0.3% from May was bumped up to -0.2%. Sales excluding autos, gas and building materials climbed 0.5% from a 0.1% gain (revised from -0.2%). Gains were rather broad-based. Motor vehicles and parts sales surged 1.2%, with building materials rising 1.2%. Miscellaneous sales bounced 1.8%. Non-store retailers climbed 1.3%. Furniture sales rose 0.4%. Gasoline station sales dipped 0.4%, with electronics off 0.5% and clothing down 0.2%.

U.S. Empire State manufacturing index surged 15.4 points to 25.2 in August, more than double than was expected, after dropping 10.0 points to 9.8 in July. This is the highest going back to September 2014. The employment component almost doubled to 6.2 from 3.9, while the workweek surged to 10.9 from unchanged. New orders climbed to 20.6 from 13.3. Prices paid rose to 31.0 from 21.3. Prices received were 6.2 from 11.0. The 6-month outlook rose to 45.2 from 34.9, with employment at 9.3 from 11.8. Capital expenditures were 11.6 from 15.0.



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Stuart Cowell

Senior Market Analyst


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