Disappointing US economic data cut short a rally in risky assets, sending USD/JPY and the carry trades (long JPY-crosses) lower.  US July advanced retail sales disappointed expectations of a pick-up in consumer spending and posted a headline decline of-0.1% vs. a forecast gain of 0.8%.  Excluding auto sales, which were boosted by the cash-for-clunkers program, the result was an even weaker -0.6% instead of the estimated +0.1% increase.  Factoring out gasoline, autos and building materials, the measure used to calculate GDP, July retail sales fell -0.2%.  Weekly jobless claims also tempered risk appetites, as initial jobless claims rose from 554K to 558K instead of an expected decline of similar size.  The 4-week moving average of weekly claims rose for the first time since June, in another potential sign that labor markets remain extremely slack.  Continuing claims did fall from 6.34 mio to 6.20 mio, but mostly due to benefits expiring rather than new jobs being found.        
      
Stocks, USD/JPY and JPY-crosses had been heading higher in European trading after better than expected 2Q GDP reports out of France and Germany, but they dropped quickly after the lousy retail sales numbers.   USD/JPY shed a half yen immediately following the data release, dropping from  about 96.25 to 95.75, but then continuing to grind lower to a low around 95.00.  EUR/JPY also fell sharply, plunging from around 137.50 to a low near 135.50 in a matter of hours as longs ran for the exits.  EUR/USD remained better supported on the day, largely consolidating near its highs between about 1.4280 and 1.4330.  Strong demand materialized at the US 30 year bond auction, leading to a further rally in US Treasuries, sending bond yields lower.  The successful bond auction instilled a shot of confidence to investors and prompted a late session run-up in stocks, which finished up around 0.6% despite the earlier disappointing data.        
      
Key events during Asian trading will be NZ June retail sales and the semi-annual parliamentary testimony of RBA Gov. Stevens, so Aussie and Kiwi could see some action.        
      
Upcoming Economic Data Releases (Asia Session) prior expected

  • 8/13/2009 22:45 NZ  Retail Sales (MoM)  JUN  0.80% -0.30%
  • 8/13/2009 22:45 NZ  Retail Sales Ex-Auto (MoM)  JUN  1.60% -0.50%
  • 8/13/2009 22:45 NZ  Retail Sales Ex Inflation(QoQ)  2Q  -2.90% 0.20%
    8/13/2009 23:30 AU  Reserve Bank Governor's Semi-Annual Parliament Testimony 13-Aug  
  • 8/13/2009 23:50 JN  BoJ Monetary Policy Meeting Minutes for May  13-Aug  
  • 8/13/2009 23:50 JN  Tertiary Industry Index (MoM)  JUN  -0.10% -0.30%