USD

The Dollar Index is pulling back this morning after three consecutive days in the green as traders digest the influx of critical data releases from the US and across the globe.

US retail sales climbed by 0.7% in July, marking the fourth consecutive monthly increase and surpassing expectations of a 0.4% rise. Non-store retailers had the highest growth at 1.9%, while sales decreased, most notably for furniture stores, electronics, and appliances.

Meanwhile, August's US NY Empire State manufacturing index came in at -19.0, significantly lower than the estimated -1.0 and its worst read since May, indicating a notable decline in manufacturing activity in the New York region.

EUR

After posting two straight losing days, the Euro is inching higher on the day following the latest institutional investor sentiment report out of Europe alongside fresh US retail sales numbers.  

The Eurozone's ZEW Indicator of Economic Sentiment improved to -5.5 in August, the highest in four months, up from -12.2 in July. Meanwhile, the same indicator for Germany increased to -12.3 from July's -14.7, indicating a slight positive shift in the economic outlook. On the other hand, there was a notable decrease in the sentiment towards Germany's current economic situation, which dropped to -71.3, the lowest since last October.

GBP

The British Pound is up 0.25% this morning after surprisingly high wage growth figures out of the UK reignited inflation concerns.

UK wages grew substantially in Q2, with average weekly earnings excluding bonuses reaching a record high of £613, rising by 7.8% year-on-year. When considering bonuses, average weekly earnings increased to £663, up 8.2% from the previous year, with the finance and business services sector leading the way.

Meanwhile, the UK's unemployment rate rose to 4.2% in June, the highest since October 2021, due to an uptick in the number of unemployed people for up to 6 months. Additionally, the UK economy surprisingly shed 66K jobs in Q2, a big miss compared to market forecasts of a 102K increase.

JPY

The Japanese Yen is trading sideways today as it looks to snap a six-day skid that has seen the currency fall to a new nine-month low. Today's moves come on the heels of a strong GDP report out of Japan alongside comments from Japan's Finance Minister.

Japan's economy grew by 1.5% in Q2, the fastest since late 2020, exceeding market estimates for only a 0.8% increase. Annualized growth was even stronger at 6.0%, supported by exports rising to a nearly two-year high and imports falling for the third straight quarter.

Earlier, Japanese Finance Minister Shunichi Suzuki stated that Japan is more focused on preventing excessive volatility rather than a specific exchange rate. Suzuki's comments came after USD/JPY rose above the level which had prompted Japan's last FX intervention in 2022.

CAD

The Loonie is down slightly heading into the North American session amidst an array of new economic data from Canada and the US this morning.

Canada's annual inflation rate increased to 3.3% in July, exceeding expectations, driven by energy and electricity price shifts, while the mortgage interest cost index rose significantly by 30.6. However, grocery prices slowed while costs for natural gas and airfares declined. Additionally, annual core inflation remained steady at 3.2%, and the CPI trimmed-mean, the BoC's preferred inflation measure, came in at 3.6%, a two-year low.

Meanwhile, Canada's manufacturing sales for June declined by 1.7%, falling short of the expected -2.0%, with 14 of the 21 subsectors declining.  

MXN

After falling 0.25% against the Dollar yesterday, the Mexican Peso is down over 0.3% on the day following the latest US retail sales and manufacturing data.  

As of this morning, the Peso remains firmly in the red for the month, down over 2%, which has been a rare occurrence as of late. Since August 2022, the Peso has only registered two losing months against the Greenback.

Meanwhile, oil prices have taken another step back this morning, although trading near their highest level since April, which has helped support the Peso.

Looking ahead, the next key report of our Mexico will be June retail sales, set for release this coming Friday.

BRL

The Brazilian Real is modestly lower this morning, fresh off yesterday's selloff that saw BRL drop over 1% against the Greenback. At the mid-way point for August, the Real is down over 5% versus the Dollar and on pace for its worst month of the year.

Like much of its LATAM counterparts, BRL is feeling the effects of recent headlines out of China that paint a gloomy economic picture for Brazil's top-trade partner. China's slowdown is also putting pressure on Brazilian equities, many with significant exposure to China's economy.

Finally, the latest declines in the Real have also weighed on the commodity market, with prices of major Brazilian exports such as sugar also weakening.  

CNY

The Chinese Yuan has fallen to a fresh nine-month low this morning following another round of disappointing economic data alongside a surprise decision from the PBoC to cut interest rates.

China's retail sales grew by 2.5% in July, showing the slowest growth in seven months, mainly due to weaker sales in categories like clothing and furniture. Meanwhile, industrial production growth slowed to 3.7% in July, with manufacturing and mining output contributing to the slower growth. Finally, the urban unemployment rate slightly increased to 5.3% in July.

Meanwhile, the PBoC shocked markets by unexpectedly cutting its key rates for the second time in three months, dropping its one-year medium-term lending rate to 2.50%.