German Retail Sales have this morning surprised markets as May's numbers showed an increase of over 2% to provide some much-needed relief for the Euro.
Of course, experiencing warmer weather has no doubt influenced this data, but it becomes more promising when you consider that German Unemployment has improved by 11,000. Showing that more people are now in work, and later in the session, we have German Inflation figures out, which also look to be improving with a drop in prices from 2.6% to 2.5%.
Usually, with Inflation dropping, we would start to see speculation rising about possible interest rate cuts and therefore see the Euro fall back. However, with Inflation falling, Retail Sales climbing and Unemployment looking better, there could be an argument that markets surprise people with potential Euro strength.
Elsewhere this morning, UK GDP has disappointed markets with the release showing that the economy grew by 0.9% in the last 12 months, falling short of the expected 1.1% growth. One contributing factor in the UK could be seen in real household income dropping by 0.8% per head, combined with household savings also falling off. What this shows is that effectively, consumers are now taking a cautious stance due to elevated price pressures across the board.
The Japanese Yen has sunk to a near four-decade low against The US Dollar, falling to 162.40 which is now the lowest level since 1986. Although a weaker Yen supports exporters' earnings and has led to driving Japan's stock market to record-highs, it has also been the main driver in increased costs for dollar-denominated imports which has ultimately seen living costs squeezed for households. The pressure off the back of this is for another government intervention in order to support The Yen and remove some pressure.
Moving away from economic data, further talks are set to take place later today between The US & Iran has further speculation builds around whether a full agreement can be made, and whether this will bring a complete stop to further attacks. As we've seen throughout the war, any talks of a deal being in place should see the US Dollar lose some of its gains against major currencies, whilst further volatility and a lack of a deal will more than likely strengthen the US Dollar's safe-haven status.
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