Sterling Higher On Retail Sales

UK retail sales rose; Gold demand declined; Eurozone CPI steady; Swiss ZEW improved. Focus is on housing market data, jobless claims and Philly Fed index.

GBP pushed higher after UK retail sales bested expectations. Annual sales remained at 3.3% in July vs. expectation of a fall to 2%. Core sales rose 2.8% from previous 1.6%. Monthly figures showed a decline but it was smaller than expected plus previous results were revised sharply higher. However, the positive data over the past two days is unlikely to change the view that the BOE could ease further. GBPUSD pushed from 1.5640s to 1.5707. It currently trades around 1.5690.

The World Gold Council reported today that global demand in Q2 fell 7% compared to Q2 2011. Imports to India dropped over 50% while imports to China declined 7%. The ongoing Eurozone crises led to 15% increase in demand from retail investors while the official sector demand more than doubled and reached a record high of 157.5t.

Other reports showed that Eurozone CPI remained steady for the third month in a row in July at 2.4% but core CPI rose to 1.7% from previous 1.6% on annual basis and that Swiss ZEW economic expectations index improved in August to -33.3 from previous -42.5

The US session starts at 8:30 am ET with building permits that are expected to rise in July to 0.77M from previous 0.76M along with housing starts that are seen steady at 0.76M. Jobless claims are anticipated higher at 365K from last 361K. Analysts predict that Philly fed manufacturing that is due at 10:00 will improve to -4.7 in August from -12.9 in July.

Canadian reports include foreign securities purchases that are expected to decline to CAD 10.67 bln in June from 26.11 bln in May and manufacturing sales that should rise 0.3% from -0.4%. Both reports are due at 8:30 am.

Patrik Urban