JPY Retail sales remain weak
EUR French housing permits rebound
Swiss UBS Consumption Indicator drops
USD Redbook, New Home Sales on tap
The Asian session brought the greenback broadly weaker against the majors, as thin holiday trading and light data left the markets to ponder downbeat news regarding US holiday sales. Across the Atlantic, the economic calendar was sparse, leaving Euro to edge back above 1.3150 while Cable bounced around the 1.9600 level. Multiple reports were released in the US yesterday on the topic of retail sales from Thanksgiving to Christmas, and nearly all of them were bearish as ShopperTrak RCT showed sales up 4.3% so far this season, short of the 5% forecast, while MasterCards SpendingPulse data reported sales up 6.6%, down from 8.7% last year. Later today, traders will have even more holiday spending data to consider, as the Redbook weekly same store sales report is set to post at 13:55GMT. The dollar could be in a precarious position when traders return to the markets after the New Year given the spate of negative consumption data along with continuous declines in the housing sector.
Meanwhile, Yen managed to hold below 119.00 and trek towards 118.50 on rumors of a Bank of Japan hike. Citing no sources, Jiji news agency reported that the BOJ will likely discuss hiking rates 25 basis points to 0.5% in January. The story underpinned yen strength for the session despite retail sales which missed expectations and continued to signal broadly weak consumption in Japan. While sales edged up 0.1% for the month of November, the annual rate slipped to -0.1%, in line with the recent overall household spending report for the same month. Given the array of weak consumer spending and CPI data out of the country, yens gains could be temporary as the BOJ is more likely to hold off until later in the first quarter of 2007 before tightening monetary policy for the first time since July.
In Switzerland, the UBS consumption indicator hit a disappointing 1.886 for the month of November while the October reading was revised down to 1.892. As a result, USD/CHF climbed slightly to the 1.2200 level as this report was just one more piece of evidence pointing to a slowdown in Swiss expansion, which the SNB has already noted with lowered inflation and growth forecasts for next year. Furthermore, the data does not bode well for the KOF Swiss leading indicator, one of the most important economic reports for the country, which is due out on Friday.
