Retail Touches All the Majors

In Europe today, data also disappointed as French Consumer Spending dropped fully by -1% versus expectations of 0.3% gain. The region’s second largest economy continued to struggle and remains the weakest link in the EZ recovery story. The EUR/USD however shrugged off the news  as news of Iran transferring its foreign reserve holdings to Asia kept the bid in the unit on fears of further escalation in geo-political tensions. Despite the turmoil or perhaps because of it, the EUR/USD has remained remarkably placid this week as traders weighed the dollar positive TICS report against the probability of more conflict in the Middle East and further Central Bank diversification into euros. At this point the market remains in a stalemate as neither side has been able to push the pair more than 100 points either way.

Finally in UK today Retail Sales jumped 4.0% on year over year basis versus expectation of only 3.7% gain. The results were welcome news to woe begotten  pound bulls, suggesting that BOE may not have to rush to lower rates in order stimulate demand. More importantly,  M4 continued to grow wildly, reaching 12% y/y rates which would likely restrain the BOE from dropping rates at a time when liquidity already appears to have reached inflationary growth levels.