Talking Points:
- April US Advance Retail Sales cruise by expectations at +1.3% m/m.
- Quick gain in USDOLLAR Index hints at markets rethinking June Fed meeting.
- More significant US economic data to come this morning.
The cornerstone of US economic strength – consumption – just got a bump at the start of Q2’16. A modest but mostly improved April US Advance Retail Sales report today has the US Dollar gaining broadly as market participants weigh the odds of the Federal Reserve hiking rates in June. With the Fed funds futures contract implying only a 4% chance of a hike in June ahead of today’s data, there’s room for markets to close the expectations gap and drive the US Dollar higher.
Here are the data lifting the US Dollar this morning:
- USD Advance Retail Sales (APR): +1.3% versus +0.8% expected, from -0.4% (revised lower from -0.3%) (m/m).
- USD Retail Sales Less Autos (APR): +0.8% versus +0.5% expected, from +0.2% (m/m).
- USD Retail Sales ex Auto & Gas (APR): +0.6% versus +0.3% expected, from +0.1% (m/m).
- USD Retail Sales Control Group (APR): +0.9% versus +0.4% expected, from +0.1% (m/m).
See the DailyFX economic calendar for Friday, May 13, 2016
Chart 1: EUR/USD 1-minute Chart: May 13, 2016 Intraday
EUR/USD had been trading in a narrow range all morning long, roughly between $1.1340 to $1.1355 ahead of the 12:30 GMT data. However, upon the release of the better than expected US consumption figures, EUR/USD was quick to drop from near $1.1345 to as low as $1.1308, at the time this report was written. Similar price action was observed in GBP/USD, which dropped from $1.4408 to $1.4366, at the time this report was written.
Chart 2: GBP/USD 1-minute Chart: May 13, 2016 Intraday
Read more: USDOLLAR Index Finding Footing - Will Key Data Comply?
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
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