The US dollar fell on Friday against the pound and the yen and almost didn’t change Vs the euro amid the release of weak Consumer Confidence and Retail Sales data in the USA. Preliminary U. of Michigan Consumer Sentiment dropped to 5-month low of 76.8 p. in September from 82.1 p. prior month. The decrease was probably caused by interest rates growth, which restrains housing market growth and economic growth in the whole; and by concerns about Syria.
Preliminary U. of Michigan Consumer Sentiment
Retails sales in August grew by 0.2% against expected growth by 0.5% - it is the lowest growth rate for four months. Core Retail Sales rose only by 0.1% while a growth by 0.3% was expected. At the same time, July data were revised upwards. Sales growth restrains tax increase, limited growth of jobs and slow increase of personal income – all this lowers consumer confidence.
By the end of the week the dollar fell by 0.81% according to the dollar index having been put under pressure after a weak labour market report. It fell Vs all major currencies except the yen (+0.13%). The dollar showed the lowest decrease against New Zealand dollar (-1.73%) and British pound (-1.58%). It fell a little less against the euro (-0.96%), Swiss franc (-0.90%), Australian dollar (-0.72%) and Canadian dollar (-0.57%).
The main event of this week and probably of the whole month may become FOMC meeting on September, 17-18 where a decision about the start of tapering off asset purchase program is expected to be taken. On Wednesday the meeting results will be announced and a quarterly press conference of FED governor Ben Bernanke will take place; also FOMC Economic Projections for inflation and economic growth will be released.
Two thirds of Bloomberg respondents wait for Fed decision concerning asset purchase reduction at September meeting; according to forecasts the reduction will be moderate – by $10 billion (to $75 bln a month). According to the opinion poll of The Wall Street Journal, most economists expect the Fed to announce bond purchase reducing by $15 billion a month. As Credit Suisse experts believe the Fed would announce purchase reducing by $20 billion.
In the euro-zone the final inflation data will be released on Monday, on Tuesday – Trade Balance and Current Account, on Friday - Flash Consumer Confidence. German ZEW Economic Sentiment will be released on Tuesday and German Business Optimism Index is expected to rise. In the UK Consumer and Producer Price Index will be released on Tuesday, on Wednesday – Bank of England Meeting Minutes and on Thursday – Retail Sales and CBI Industrial Order Expectations.
The decision of the Swiss National Bank on the key interest rate will be announced on Thursday. Japanese trade balance will be published on Thursday. In Australia the Reserve Bank of Australia Meeting Minutes and New Motor Vehicle Sales will be released on Tuesday, on Wednesday - Conference Board and Westpac Leading Index. In New Zealand quarterly data will be released: on Wednesday – Current Account and on Thursday – GDP for the second quarter.
In Canada Manufacturing Sales will be published on Tuesday, on Thursday - Wholesale Sales and on Friday – Inflation. There will be quite a lot of data in the USA: on Monday - Empire State Manufacturing Index and industrial output, on Tuesday – Consumer Price Index, Capital Influx and NAHB Housing Market Index; on Wednesday - Building Permits and Housing Starts; on Thursday - Existing Home Sales, Philadelphia Fed Manufacturing Index and Current Account.