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U.S. Dollar Resumes Loss as December Retail Sales Miss Estimates

By Trang Nguyen
12 January 2012 15:14 GMT

THE TAKEAWAY: U.S. Retail Sales Rose Less than Forecast in December> Gains in Motor Vehicle, Furniture Stores Offset Losses in Electronics and Appliance Stores and Gasoline Stations > EUR/USD bullish

U.S. retail sales failed to maintain pace of growth for the fourth month in December following September acceleration as holiday massive discount reduced the value of goods sold. According to a report released by the U.S. Department of Commerce today, retail and food services sales, adjusted for seasonal variation and holiday and trading-day differences, for December modestly increased $400.6 billion, or as much as 0.1 percent, from November and 6.5 percent from a year earlier. The print missed consensus forecast as seventy-five economists surveyed by the Bloomberg News had predicted a stronger gain of 0.3 percent.

Canadian Retail Sale: January 2010 to Present

011212_US_Advance_Retail_Sales_December_body_Chart_2.png, U.S. Dollar Resumes Loss as December Retail Sales Miss Estimates

Prepared by Trang Nguyen

Excluding autos, December retail sales retreated 0.2 percent while excluding auto and gas, sales remained unchanged. Regarding to kind of business, retail sales in motor vehicle and parts dealer advanced 1.5 percent compared to 0.9 percent gain in November. Besides, sales in furniture and home furniture stores also rise 1.0 percent as a result of improved housing activity in recent months. In contrast, electronics and appliance stores registered the largest percentage fall of 3.9 percent. Likewise, sales in gasoline station slumped 1.6 percent on cheaper fuel prices.

EUR/USD 1-minute Chart: January 12, 2012

011212_US_Advance_Retail_Sales_December_body_Picture_1.png, U.S. Dollar Resumes Loss as December Retail Sales Miss Estimates

Charts created using Strategy Trader– Prepared by Trang Nguyen

As can be seen from the 1-minute EURUSD chart above, the currency pair dropped approximately 30 pips from 1.2770 to 1.2740 following the European central bank’s rate announcement at 7:45 A.M. Eastern Time and post-rate ECB President Draghi comments on the press conference. Market sentiment faded as he stressed that economic outlook in the Eurozone has been facing “substantial downside risks” and subjected to “high uncertainty”. The EUR/USD pair continued to plunge 20 pips within ten minutes after a weaker-than-expected U.S. retail sales report release. Nonetheless, a trend reversal happened after twenty minutes as the greenback quickly resumed loss against the euro, falling from 1.2720 to 1.2750. At the time this report was written, one euro traded at $1.2749.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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12 January 2012 15:14 GMT