The commodity currencies continued their midsession rally back towards their opening ranges following the better than expected advance retail sales report out of the United States on Monday. The report, released at 12:30 GMT, showed that US consumers remain resilient despite elevated energy costs, further underscoring hopes that the US recovery is weathering recent headwinds. The 0.8 percent gain in sales in March cruised past the 0.3 percent consensus forecast, according to a Bloomberg News survey.

The surprising print comes as a welcomed sigh of relief for investors who have endured a steady stream of disappointing data the past few weeks. In fact, just as Federal Reserve policymakers started to begin publicly discussing withdrawing stimulus, a very weak US labor market report has left the near-term outlook for policy opaque. Regardless, what is clear is that the US consumer continues to power the US growth story (consumption accounts for nearly 70 percent of gross domestic product) with the advance retail sales print showing expansion of 0.7 percent or greater for the third consecutive month and for the fourth time out of the past six prints.

AUDUSD 1-min Chart: April 16, 2012

Aussie_Loonie_Rally_as_US_Retail_Sales_Spurs_Flight_to_Yield_body_Picture_1.png, Aussie, Loonie Rally as US Retail Sales Spurs Flight to Yield

Charts Created using Marketscope – Prepared by Christopher Vecchio

On the better than expected print, the US Dollar sold off against its higher yielding counterparts, in particular the commodity currencies, the Australian, Canadian, and New Zealand Dollars. The AUDUSD was among the best performers following the report, jumping approximately 25-pips from 1.0343 to 1.0368 within a half hour after the data was released. Similarly, the USDCAD, which remains trapped in a tight range between 0.9850 and 1.0050, fell back 30-pips to 0.9975 on the news.

--- Written by Christopher Vecchio, Currency Analyst

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