Thursday AM: AUD Flying High | GBP Awaits Retail Sales | USD Consolidating

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GBP

At 09:30 B.S.T. the Office for National Statistics release their retail sales data for June; disappointment could weigh but with sentiment towards Sterling so poor at this juncture we doubt any major downside will be triggered by disappointment.

Therefore, the greater risk-reward skew is to the upside on any good beats of expectations.

Markets are looking for a month-on-month read of 0.1%, annualised the figure should read at 3.7%.

"Today’s retail sales report is the last important UK data this week. The headline index is expected to be soft after a strong rise in sales in May, but heavy discounting in the summer sales (apparent in yesterday’s CPI) may skew the risk to the upside," says Adam Cole at RBC Capital Markets.

Technical studies suggest Sterling could be due some support following this week's already realised declines.

"GBP/USD is in marginal new lows for the year and looks set to tackle psychological support at 1.3000. We note that the daily RSI has not confirmed the new low and directly below here lies Fibonacci support at 1.2918 (50% retracement of the move up from 2016) and it is possible that we will see some profit taking here," says Karen Jones with Commerzbank.

AUD

The Australian Dollar is outperforming with a quarter of a percent gain against the Pound taking GBP/AUD down to 1.7631. AUD/USD is 0.20% higher at 0.7412.

Driving the gains was a beat on employment data with the headline figure rising 51K in June (consensus was for a mere 17K!) and the detail of the report was also encouraging.

"The report will give the RBA some comfort that the weakness in early 2018 was probably temporary with the leading indicators of employment reasonably encouraging coupled with near-trend growth. The data will likely temper the whispers around RBA cuts, but we still see no rush to hike," says RBC Capital's Cole.

USD

The Dollar has been an outperformer this week, registering a 0.25% advance on the Euro and 1% advance on the Pound over the course of the past five trading days.

There were no surprises in Fed Chair Jerome Powell's second day of testimony in front of the House Financial Services Committee, where the overall message was repeated that the FOMC will continue hiking the interest rate gradually.

The Philadelphia Federal Reserve manufacturing index dominates a quiet US calendar today. The headline index fell sharply last month, though it remains at historically elevated levels.

A reading of 21.6 is expected, a beat or miss on this could influence Dollar moves this afternoon.

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