3 Numbers to Watch: US Retail Sales, UK CPI & DE ZEW data

We are expecting plenty of activity today ahead of some major economic data releases. None perhaps more important that the July figure for US retail sales, which is expected to show a rebound after three-months of negative data. In the UK, CPI is expected to come in slightly lower as inflation nears the 2% target. Meanwhile, the ZEW survey of financial experts will provide some insight into economic sentiment for the single currency bloc’s largest economy.

US Retail and Food Sales (12:30 GMT) US retail sales figures for July are projected to have grown by 0.3%, according to a consensus, compared to last month’s dismal numbers, which saw a 0.5% drop in June and 0.2% fall in May. John Hardy, Head of FX Strategy for Saxo Bank, says US consumers have been on strike for the last three months and that if a fourth negative number comes in, it could reinvigorate discussions about a recession. The Federal Reserve has been hesitant to step up its quantitative easing programme as the US economy has showed some signs of improvement of late. However, this could change if retail sales, one of the economy’s main drivers of growth, were to fall below expectations.

UK CPI inflation (08:30 GMT) The Office of National Statistics is due to release its July estimate for UK CPI, with the consensus expecting inflation to remain marginally unchanged lower at 2.3%. Nick Beecroft, chairman of Saxo Capital Markets UK, says it wouldn’t be surprising if the number came in even lower, seeing as the previous three estimates fell below expectations. In its August Inflation Report, the Bank revised its inflation forecast saying it was likely to reach the 2% target before the end of the year. However, in the wake of lower commodity and energy prices, heavy discounting among retailers and a generally weak economy it could conceivably hit the target sooner.

ZEW Indicator of Economic Sentiment (09:00 GMT) Following the recent slew of poor economic data on the eurozone this week, we expect the ZEW survey to show a third consecutive decline in economic sentiment in Germany. The indicator seems likely to fall to 15 for July, from 21.1 last month. This comes amid reports that Germany may face a European Commission warning to shrink its current account surplus, which amounts to €210 billion, the highest of any nation this year in US dollar terms. Also due out later today is the second quarter estimates for Eurozone GDP growth, which is forecast to contract by 0.2%.