This week we have seen some positive economic indicators from the US. On Monday, the labour market showed an improvement and the labour costs beat the expectations on Tuesday. The pick up in the labour costs mean how much the wages of the US workers are increasing. So, when this number exceeds the expectations means that the wages are increasing faster than the economists expect, which is great isn´t it? 

On Wednesday the new job openings number for June was 100k above the consensus while the unemployment claims remained low on Thursday. That was all ice cream and jelly for the FED (Federal Reserve) and for whoever wishes that the US economy gets in the fast lane soon. But, that wasn´t meant to be. We forex traders can´t enjoy an easy week, can we?

USD/JPY fell more than 100 pips after the data was released

The producer inflation (PPI) and the retail sales which were released about an hour ago missed badly. The inflation and core inflation numbers were negative as well as the retail sales. Only the core retail number came out flat, still much lower than expected. The USD lost about a cent in most forex majors. Who knows the reason why? Yep, you guessed it right, the odds for a September interest rate hike by the FED dropped like a stone to just 16%.

The retail sales are very volatile, oscillating up and down from month to month, so you cannot totally rely on the monthly numbers for whatever decision. But, that together with the producer inflation are two heavy stones, which will weigh on the negative side when the FED puts on the balance the negative and the positive indicators in order to decide whether to hike the interest rates.