The weak US housing data of July could weigh on the US stocks which have started retracing some of its recent loses today as the US housing starts of July came down by .1% m/m after increasing by 3.6% in June and also the building permits came down by 1.8% in July after rising by 10% in June as the struggling consuming pace in US in the recent 2 months is still containing the current market sentiment putting pressure on the US indexes after the release of  August University of Michigan Consumer Confidence preliminary reading last Friday which was expected to get better to 68 from 66 in July and it has come down to 63 and these data came a day after the weak US retails sales figures of July which have shown a broadly monthly falling by -.1% and the market was waiting for rising by .3% of this broad figure and the core figure excluding the auto sales which have fallen by -.6%.

The core PPI of July came down by .1% m/m while it was expected to rise by .1% and the core yearly fell by .9% and it was expected to decline by just .2% showing no inflation pressure in the producing level after last Friday CPI data of July which have shown a tame inflation pressure over the consuming level too amid the current sluggish consuming figures which lead to the recent falling of the US stoccks. US July core CPI has been up by just .1% and the market was waiting for .2% and the broad figure came monthly unchanged while it was expected to go up by .1%. These data ensure the Fed's recent assessment which came out last week which has shown that the Fed is not worried about the inflation outlook over the medium term as it does about the unemployement which contributed in the current soft consuming pace and inflation pressure.

The single currency has been supported recently by surprising data has started with last week release of EU GDP of the second quarter which came at just -.1% q/q and -4.6%y/y and it was expected to be -.6% q/q and -5.1% and it has continued today the uprising release of the germane ZEW of August which was expected to go up to 45 from 39.5 in July it has surprised the market this morning by rising to 56.1 this month and also August ZEW survey of the EU which shows the economic sentiment has gone up to 54.1 from 39.5 in July and it was expected to be just 43 which pushed the single currency above 1.41 for a while but the single currency could not keep this gains and it is now trading below 1.41 versus the greenback negatively impacted by the current missing confidence of the investors to hold assets and take risk selling the greenback as a low yielding currency for taking risk.

Best wishes


FX Consultant

Walid Salah El Din

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