News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Forex News: USD/JPY Rally Continues Despite Miss on US Retail Sales

Forex News: USD/JPY Rally Continues Despite Miss on US Retail Sales

Christopher Vecchio, CFA, Senior Strategist

THE TAKEAWAY: USD Advance Retail Sales (OCT) > -0.3% versus -0.2% expected, prior +1.3% (m/m) > USD/JPY BULLISH

The effects of Hurricane Sandy, which wrecked much of the Atlantic coastline and disrupted the New York Metropolitan economy for at least a week, can now be quantified: the October Advance Retail Sales report showed its first decline in four months. After a +1.3% month-over-month expansion in September, October produced a contraction of -0.3% m/m, slightly worse than the -0.2% m/m forecasted by Bloomberg News.

Of note, the breakdown of the report shows an interesting shift: consumer staples spending (i.e., necessary items like food) outpaced discretionary spending (i.e., unnecessary items like televisions). In part, this might have been due to nearly a quarter of the country being directly affected by Hurricane Sandy over a week period, thus forcing them to stock up on supplies.

On the other hand, if this trend continues in November, then what could be happening is preparation by consumers ahead of the fiscal cliff. That is, consumers are spending less money on items they don’t necessary need, and only on items they do (hence, staples outpacing discretionary). Thus, continued gridlock over the fiscal cliff would be very negative for 4Q’12 GDP.

USD/JPY 1-minute Chart: November 13, 2012

Forex_News_USDJPY_Rally_Continues_Despite_Miss_on_US_Retail_Sales_body_Picture_1.png, Forex News: USD/JPY Rally Continues Despite Miss on US Retail Sales

Charts Created using Marketscope – Prepared by Christopher Vecchio

Following the release, the USD/JPY rallied from 80.15 to 80.30, before dropping back to 80.28, at the time this report was written. The USD/JPY has been gaining despite the miss on the data, suggesting that influences elsewhere are driving price action. Indeed, this may be true: the sitting government in Japan looks like its about to collapse; and President Barack Obama, a Democrat, is working closely with business leaders, labor leaders, and Republican Congressional leaders on a solution to the upcoming fiscal slope.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES