Euro Surges on Strong Services Activity, Retail Sales Awaited

The Eurozone services activity saw an unexpected surge in July, with Spain's HCOB Services Purchasing Managers Index (PMI) jumping to 58.3, exceeding the preliminary estimate of 55.3 and rising above the previous reading of 54.2.

Germany's Services PMI was revised higher to 49.8 from 49.6, although it remains below the 50 threshold that separates expansion from contraction. The Eurozone Composite PMI rose modestly to 52 from the 51.9 flash reading, indicating a gradual private-sector recovery led by the periphery.

The Bank of Japan's (BoJ) Minutes of its June policy meeting revealed policymakers debating price risks that would likely require further rate hikes even as they raised borrowing costs to a 31-year high at that same meeting. Governor Kazuo Ueda has repeatedly signaled that the central bank is prepared to accelerate the pace of normalization.

The Euro (EUR) drew support from the stronger-than-expected batch of final services surveys, but attention now turns to Eurozone Retail Sales. Consumer spending is expected to rise just 0.1% MoM in June, down from 0.2%, with the annual pace slowing to 1% from 1.6%. A soft print would sit awkwardly alongside the upbeat services surveys and suggest that improved business sentiment has yet to translate into household demand.