EUR/usd
The relatively good statistics from the core EU countries didn't manage to outweigh the slowdown in the periphery. Despite the stronger data from the biggest economies of Germany and France, the GDP of the whole eurozone shrank by 0.2% according to the average estimate. Against the level recorded in the same quarter of the previous year the decline made 0.4%. It hasn't been a big surprise, but was still enough to shift the market pendulum towards sell-offs of the single currency. From the daily highs of 1.2385 it sank down to 1.2315 by the beginning of the Asian session. But the periphery wasn't the only source of bad news yesterday. The ZEW economic sentiment for Germany dropped down to -25.5 in August, which is the lowest level since last December. Then, in December, this indicator fell much lower (the low of November made -55.2), but even then the current situation got higher estimates. Yesterday's statistics showed that this index fell down to 18.2, the level last seen in mid 2010, when EUR/USD hit the low at 1.19. Is the situation really so bad, that the only way out of it is up? Unfortunately, no. Apparently, the lowest levels of business activity and main debates concerning the future of the euro and mechanisms to save it are to be seen closer to the end of the current 3rd quarter. September promises to be extremely stress-filled, so for the time being the markets prefer to avoid any sharp moves and unchartered territories. Yesterday's statistics on US retail sales was in favour of the dollar – healthy growth by 0.8% after a 0.7% decline in the previous month. As a result, we also have quite a handsome growth against July 2011– by 4.4% (the local peak of this index was 8.9% y/y exactly a year ago). Yet you should be very cautious here, as this index is not inflation adjusted, i.e. that from this 4.4% of growth we can with confidence subtract inflation, which according to the recent figures made 1.7% in June. The fresh data on the US CPI will come out this afternoon. It is expected that the index has slowed down its growth in July, lowering the general inflation rate to 1.6%, but keeping the core one at 2.2%. The prices are unlikely to hold in the downward trend, taking into account the current drought in the States, which has already pushed the food prices up.
GBP/USD
The times of highly unstable inflation in Britain seem to be coming back. Over a long period of time after the recession the Bank of England has been mistaken in its inflation forecasts, underestimating the inflation rate. The same has been seen on the part of market analysts. The release of the July statistics aroused a sense of déjà vu. Instead of the expected decrease by 0.1% we saw increase by the same figure. The annual rate of inflation has accelerated up to 2.6%, the retail price index – up to 3.2% against 2.4% and 2.8% in the previous month accordingly. This day is also very important for the pound. We'll see labour market statistics and minutes of MPC meeting in August. Remember that then the committee decided to leave the policy as it was, but the quarterly inflation report, published later, made it clear that the Bank of England counted on the new Funding for Lending scheme as a replacement for QE, not as its supplement.
USD/JPY
The yen has made a decisive step, coming out of the 78-78.70 channel. Buyers became active already in the middle of the European session, and then the move got momentum after the release of the US retail sales statistics. Since then there was a slight correction, which drove the pair from the high of 78.92 to 78.70 (the resistance turned into the support). However, this morning the pair again grew to 78.90. The fighting can now unfold around 79.20, the current level of the 200-day MA.
gold
There is a feeling that Gold got upset over the strong statistics on the US retail sales more than any other asset. On the release the rate sank right by 23$. Actually, sharp selling impulses have been frequently observed within the last two days. For now the asset remains in the upward trend, but it seems that soon we'll see a battle for the further trend.
