US Retail Sales - The Dollar's Breaking Point?

AUD

The Aussie Dollar continues to lose ground against the majors into the start of the week, with Asian equities following suit. The ASX was down -0.1% and Shanghai Comp down -0.9%. No news domestically yesterday; however, mixed Chinese data gave the AUD some movement. GDP q/y arrived below expectations of 7.1%, coming in at 6.3%, still higher than the previous 4.5% given the base period was a covid restriction-riddled China. Industrial Production y/y came in much above the expected 2.5% at 4.4%, also beating the previous reading of 3.5%. This data left the markets a bit stunned, with the economic growth being slower than expected with the GDP results, but upstream growth with industrial production being higher than expected. Future growth is looking promising for China. Domestically, the Monetary Policy Meeting Minutes are due to be released at 11:30am, giving insight into whether the board was split or unanimous on pausing rate hikes and what potential there is for further down the line.

USD

The AUDUSD slid yesterday, briefly losing the 0.68 handle in the night before a rebound into today’s open of 0.6817. Wall St remained in positive territory into the close with the NASDAQ up 0.9%, the S&P 500 up 0.3% and the Dow Jones up 0.2%. Looking to the data last night, the US Empire State Manufacturing Index for July printed at +1.1, down from +6.6, though better than expectations of -3.5. This data adds to the better-than-expected data trend we have seen recently from the US, showing that there is a faster economic recovery than many had foreseen & potentially breaking the US Dollar's back. Tonight, we have Core Retail Sales m/m which is expecting growth from 0.1% to 0.4% and Retail Sales m/m is forecasting growth from 0.3% to 0.5%. This will be the major piece of US data for the week.

EUR

AUDEUR opens lower this morning, with a steady decline throughout yesterday into a small bounce overnight to this morning’s open at 0.6064. The European equities closed lower yesterday, with the DAX down 0.2% and the CAC down 1.1%. It was a light day on data for the Eurozone, with the key piece being the ECB President Lagarde's pre-recorded opening remarks at an ECB conference. The speech was a geopolitical talk that did not have much economic insight, not influencing the markets. The G20 meetings continued yesterday and will push on into today with the only other piece being released today is the EU Economic Forecasts, giving economic forecasts for the next 2 years. All-in-all, a quiet week for the Eurozone.

GBP

The AUDGBP opens lower this morning, with the pair chopping around yesterday into today’s open of 0.5210. British equities follow the global trend by closing lower, with the FTSE down 0.4%. Looking at the data yesterday there was only one piece, being the Rightmove HPI m/m, reading -0.2%, down from 0.0% last month. Today there is only one piece of data being released, being the 30-y Bond Auction, with all eyes being on Wednesday’s CPI y/y reading which will show if Britain’s sticky inflation has finally reached its peak. The headline figure is expected at +8.2%, down from last month's +8.7%, while the stickier Core figure (still causing headaches at the Bank of England) is expected at +7.1%.

NZD

The AUDNZD has gained ground from yesterday, going from monthly lows to open today at a weekly high of 1.0780. The BusinessNZ Services Index was released yesterday, with the reading of 50.1 being lower than the previous 53.1, barely sitting in the expansionary reading. There is no news out today, however there is CPI q/q being released tomorrow morning, showing whether the rate pausing at 5.50% is enough to quell inflation, as is expected by the RBNZ.