US Dollar Rebounds against British Pound, Euro after Strong February Sales
What budget sequestration? US consumers are looking right through the payroll tax hike in January and the ensuing budget cuts that hit on March 1, boosting consumption to its highest pace since September in February. The Commerce Department’s Advance Retail Sales report showed that consumption increased by +1.1% m/m in February, after a revised +0.2% m/m gain in January, easily beating the +0.5% m/m forecast provided by Bloomberg News. As the top US event risk this week, the report should firm up what has been an increasingly bullish fundamental backdrop for the US Dollar.
EURUSD 1-minute Chart: March 13, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the release, the US Dollar posted gains across the board, in particular against the European currencies. The EURUSD tumbled from 1.3010 to as low as 1.2963, before rebounding to 1.2972, at the time this report was written. The GBPUSD dropped from its daily highs near 1.4980 to as low as 1.4935, before rebounding to 1.4948. Curiously, despite the 2s10s US Treasury spread widening out by 3-bps on the data, the USDJPY held steady just under 96.00.
--- Written by Christopher Vecchio, Currency Analyst
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