US economic data came in mixed last Friday, although the numbers were mostly weaker than expected. Headline retail sales fell by 0.1% as expected while core retail sales dropped by 0.1%. The headline PPI showed a 0.2% dip in producer prices while the core figure posted a 0.1% uptick. The Empire State manufacturing index was a huge disappointment as it fell deeper into industry contraction but consumer sentiment improved, according to the preliminary index released by the University of Michigan. US equity indices were down 2% on Friday ahead of today’s Martin Luther King, Jr. holiday.
The euro managed to stay resilient amid the bloodbath among higher-yielding assets last Friday. The region’s trade balance was better than expected at a surplus of 22.7 billion EUR versus the projected 21.1 billion EUR surplus. Only the Italian trade balance is up for release today.
The pound suffered another sharp selloff as the London FTSE chalked up large losses on Friday. There were no major reports out of the UK on Friday and none are due today, which suggests potentially quiet trading ahead of the top-tier reports (CPI, jobs, retail sales) due later on this week.
The franc also managed to hold on to some of its recent wins even with the risk-off market environment last week. There were no reports out of Switzerland last Friday and market sentiment might be the only strong driver of price action today with no other reports due as well.
The yen took advantage of the run in risk aversion on Friday, as it advanced against higher-yielding currencies and even the safe-haven US dollar. There have been no major reports out of Japan then while today has the revised industrial production and tertiary industry index due.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were in the red again when traders started pricing in the potential impact of Iran’s return to the oil export market once the Western sanctions are lifted. Concerns about China’s growth figures due this week also gripped the market, leading traders to steer clear of riskier currencies and assets. There are no major reports due from the comdoll economies today.