Euro area retail sales drop in July, likely to return to positive territory

Euro area’s retail sales figure for the month of July appeared disappointing. On a month-on-month basis, the currency bloc’s retail sales dropped 0.3 percent, as compared with the prior month’s 0.6 percent rise and consensus expectations of a drop of 0.2 percent. On a year-on-year basis, the retail sales grew 2.6 percent, as compared with June’s growth of 3.3 percent and consensus expectations of 2.5 percent rise.

Despite increased household spending in France, with sales in Germany having dropped more than originally expected, euro area retail sales fell. The fall was mainly because of a huge decline in sales of auto fuel and food, and so, excluding these items, sales of ‘core items’ rose for a third straight month.

Furthermore, given strong results in the previous months, overall sales were however up 0.7 percent three-month- on -three-month and 2.6 percent year-on-year, both rates above their averages so far in 2017 and in line with strong spending momentum. With consumer confidence in August having increased back close to sixteen-year high reached in June, a rapid return to positive retail sales growth is expected, noted Daiwa Capital Markets Research.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -41.2848, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -63.7883. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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