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Risk-off vibes lingered for the most part of the New York session, allowing the lower-yielding yen and franc to stay on top. The dollar had a mixed run as economic data also came in mixed while the Loonie lagged far behind for the rest of the day.

  • U.S. headline retail sales up 0.5% vs. 0.1% forecast in July
  • U.S. core retail sales up 0.6% vs. 0.3% forecast in July
  • U.S. June headline and core retail sales downgraded to 0.2%
  • Empire State manufacturing index up from 22.6 to 25.6 vs. 20.1 forecast
  • Preliminary non-farm productivity up 2.9% in Q2
  • Preliminary unit labor costs down 0.9% in Q2
  • Industrial production rose 0.1% vs. 0.3% forecast
  • EIA crude oil stockpiles increased 6.8M barrels vs. expected 2.6M drop
  • U.S. business inventories up 0.1% vs. 0.2% forecast

Major Events/Reports:

Mixed U.S. data

Uncle Sam’s reports turned out as mixed as a bag of M&Ms, red and green ones to be specific, as a handful of figures came in stronger than expected but downgrades were seen.

Headline retail sales rose 0.5% in July, much faster than the projected 0.1% uptick, while the core figure advanced 0.6%, twice as much as the 0.3% consensus. However, the June readings were revised lower to 0.2% for both versions.

Components of the July retail sales report revealed that the gains were spurred by higher purchases of motor vehicles and clothing. Analysts say that this confirms the U.S. economy was on solid footing to start the second half of the year.

The Empire State manufacturing index also beat expectations by jumping from 22.6 to 25.6 instead of falling to the 20.1 consensus. Underlying data showed that the pickup was spurred by an increase in new orders, as well as solid gains in employment.

Industrial production printed a meager 0.1% uptick in July versus the estimated 0.3% gain, though, as businesses might have scaled back activity on account of heightened trade tensions then.

Data from the Bureau of Labor Statistics also indicated that preliminary non-farm productivity rose from 0.4% in Q1 to 2.9% in Q2 versus the estimated 2.4% figure. This tends to put downside pressure on wages, which was reflected by the 0.9% drop in unit labor costs versus the estimated 0.1% dip in the same period.

Stocks and commodities down

Unlike the previous day, the rise in the Turkish lira wasn’t enough to whet risk appetite as traders focused on the decline in other emerging market currencies. Market watchers seem hopeful that the meeting between the finance ministers of Germany and Turkey, as well as the investment from Qatar, could alleviate the economic situation.

Still, U.S. equities ended in the red:

  • Dow 30 index is down 137.51 points to 25,162.41 (-0.54%)
  • S&P 500 index is down 21.51 points to 2,818.37 (-0.76%)
  • Nasdaq is down 96.78 points to 7,774.12 (-1.23%)

Gold continued its slide, which is being pinned on dollar strength, while crude oil also gave up ground due to a surprise buildup in U.S. inventories.

  • The precious metal fell to $1,175.65 per troy ounce (-1.55%)
  • WTI crude oil fell to $64.94 per barrel (-3.13%)

Major Market Mover(s):

JPY

The yen held on to its top spot from the earlier trading session. It even managed to squeeze out a few more gains as risk aversion extended its stay.

USD/JPY slid from 111.15 to a low of 110.43; EUR/JPY fell to a low of 124.91 before pulling slightly back up; GBP/JPY tumbled below the 140.00 mark; and AUD/JPY is down to 79.98.

CAD

The Loonie was unable to claw its way out of the bottom of the forex heap throughout the day, bogged down further by weaker crude oil.

USD/CAD is up from 1.3098 to a high of 1.3175; CAD/JPY tumbled from 84.83 to a low of 83.83; EUR/CAD popped back up to 1.4905; and AUD/CAD is up to .9526.

Watch Out For:

  • 11:50 pm GMT: Japanese trade balance (0.02T JPY surplus expected)
  • 1:00 am GMT: Australia’s MI inflation expectations (3.9% previous)
  • 1:30 am GMT: Australian employment change (See Forex Gump’s preview!)
  • 1:30 am GMT: Australia’s unemployment rate (no change from 4.9% expected)