Losses for the U.S. dollar against most major currencies

The U.S. dollar lost some grounds against most major currencies yesterday, as data showing a third consecutive monthly decline in U.S. retail sales bolstered expectations for another round of easing by the Federal Reserve. The Commerce Department said U.S. retail sales fell by a seasonally adjusted 0.5% in June, confounding expectations for a 0.2% increase, after a 0.2% drop in May.

Closer to home, the Euro suffered more onslaught against the Pound yesterday and there were concerns about the debt crisis across Europe knocking the Euro, which pushed the trading rate for GBP-EURO up to levels not seen since October 2008! The Pound rose to 1.2768 at Interbank yesterday, another high for 2012 so far. It will be interesting to see how far this momentum can continue, with the currency currently trading at a fantastic rate. The main reason for the Euro to suffer was the ongoing downgrades by Moody’s of 8 Italian banks. The downgrades followed Friday’s downgrade of Italy’s sovereign.

Germany’s constitutional court announced that it will deliver a ruling on whether the Eurozone’s permanent bailout fund contravenes the German constitution on September 12, disappointing hopes for an earlier decision.

Looking ahead at the markets today, it is an extremely busy day for all the major currency pairs with fundamentals expected that could potentially move markets. In the UK the main focus is on Consumer Price Index. In the EU figures from the German ZEW Survey could have an effect and across the pond in the US, Consumer Price Index and Fed's Bernanke Delivers the Monetary Policy Report to Senate. 

Today’s Fundamentals

08.30 GBP Consumer Price Index – This is expected to stay the same at 2.6%.

09.00  EUR German ZEW Survey (Economic Sentiment) (JUL) – Expected to decrease to -20 from -16.9.

12.30 USD Consumer Price Index Ex Food & Energy (YoY) (JUN) – This is expected to come out weaker than the previous figure. 2.2% compared to 2.3%.

12.30 USD Consumer Price Index (YoY) (JUN) – This is expected at 1.6% instead of the previous figure of 1.7%.

14.00 USD Fed's Bernanke Delivers Monetary Policy Report to Senate 

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