The euro continues to show little movement this week. On Tuesday, EUR/USD is trading in the mid-1.29 range. On the release front, the German and Eurozone investor confidence indicators softened in August. In the US, today's highlight is the Producer Price Index, the first major US event of the week. The markets are expecting a small gain of 0.1%, which would be unchanged from the previous reading.
The news out of the Eurozone remains grim, as German ZEW Economic Confidence, a key event, slipped to 6.9 points last month. The indicator has now dropped over nine consecutive months, down from a high of 62.0 points back in November. Eurozone ZEW Economic Sentiment followed a similar downturn, coming in at 14.2 points, its eighth straight decline. The German indicator managed to beat the estimate of 5.2 points, but the Eurozone figure was well short of the forecast of 21.3 points. The weak data points to crumbling confidence in the German and Eurozone economies, which does not bode well for the slumping euro.
US numbers wrapped up last week on a high note. Core Retail Sales improved to 0.3%, edging above the estimate of 0.2%. Retail Sales posted a nice gain of 0.6%, well above the estimate of 0.3%. There was excellent news from the UoM Consumer Sentiment, which bounced back from a weak reading in July and improved to 84.6 points, its best showing since November 2012. The forecast stood at 83.2 points. These indicators point to an increase in consumer confidence and spending, which underscore a deepening economic recovery.
US job numbers continue to be source of concern. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed's plan to continue trimming QE later this week, but a soft labor market could postpone plans to raise interest rates by mid-2015.
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