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US Retail Sales, RBNZ & Tencent

Video Script

Number one: US retail sales

This week Forex traders will be looking to this datapoint to see if it can usher the dollar out of its recent consolidation. EUR/USD has been notably locked around the 1.02 level. US retail sales data is released Wednesday and forecasts are for sales ex-auto to contract -0.1% month-over-month in July after the stunning 1% increase in June. Signs of a weaker consumer could undermine the optimism created by the strong non-farm payrolls at the start of the month.

Number two: RBNZ rate decision

The sole major central bank to make a decision on rates in the week ahead is the Reserve Bank of New Zealand. Economists expect another half-point increase to take New Zealand rates from 2.5% to 3%. NZDUSD is up from its 0.606 low, in what looks like a correction within a downtrend - more interestingly AUDNZD is up at 4-year highs as the Kiwi loses out to the Aussie dollar.

Number three: More Q2 earnings

Some of the earnings highlights this week include Tencent, JD.com, Geely, Walmart, Home Depot, Cisco, and BHP Billiton. Notably, analysts predict Tencent’s revenue will fall 1.7% in the April to June period for its first-ever quarterly sales decline as a public company. It follows Chinese rival Alibaba reporting its own first quarterly revenue decline. Walmart investors might be bracing before the retailer’s Q2 results after the shocking decline seen post Q1 earnings.

Number four: UK inflation

UK CPI is expected to rise further in July from the 40-year high of 9.4% reported in June. The British pound has rebounded against the dollar in the past 3 weeks but progress has been limited. While the Bank of England just raised rates by the most in 27 years (0.5%) at its July meeting it has accompanied the decision with a forecast for inflation to rise further to 13% y/y and for a recession - otherwise known as stagflation.

Number five: Other

Elsewhere this week China reports industrial production and retail sales on Monday. The UK reports unemployment data and Canadian CPI is out on Tuesday. Eurozone Q2 GDP is released Wednesday and Thursday sees Australian employment data and Eurozone CPI released. Finally, on Friday there is Japan CPI and UK retail sales is released.