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EUR/USD Largely Muted After Mixed U.S. Data; All Eyes on Yellen

EUR/USD Largely Muted After Mixed U.S. Data; All Eyes on Yellen

Diego Colman, Strategist

Talking Points:

- November Advance Retail Sales +0.1% vs +0.3% expected from a revised +0.6% in October

- Nov PPI Final Demand beat expectations at +0.4% from a flat print the previous month.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

U.S Advance Retail Sales moderated in November after a revised +0.6% increase in October as steady gains in the labor market remains supportive of consumption.

The U.S. Department of Commerce said that November Retail Sales edged up +0.1% slightly below market estimates of a +0.3% rise. Meanwhile, Retail Sales excluding auto climbed +0.2% also trailing forecasts of a 0.4% increase suggesting a loss of momentum in economic growth in the last quarter of 2016.

Concurrently, but in a separate report, the Bureau of Labor Statistics said that Producer Price Index Final Demand accelerated +0.4% m/m and +1.3% y/y. Analysts surveyed by Bloomberg News had expected to see a +0.1% m/m +1.3% y/y increase. The better than expected Producers’ inflation report represents good news for the U.S. economy as it indicates consumer prices may start moving higher soon after remaining stubbornly low for the last few years.

Despite the mixed economic data, traders are mostly focused on the FOMC rate announcement later in the day. The market is unanimously expecting that the Federal Reserve will increase its benchmark rate by 25bps after remaining on the sidelines for almost 12 months. In any case, the characterization of overall economic conditions in the SEP and the path of interest rate hikes going forward will undoubtedly be of more interest for market participants.

Here are the data that’s whipping the US Dollar back and forth this morning:

- USD Advance Retail Sales (Nov): +0.1% versus +0.3% expected, from a downwardly revised +0.6%

- USD Retail Sales Less Autos (Nov): +0.2% versus +0.4% expected, from a downwardly revised +0.6%

- USD PPI Final Demand (Nov): +0.4% m/m, +1.3% y/y versus +0.1% m/m, +0.9% y/y expected

- USD PPI Ex. Food & Energy (Nov): +0.4% m/m, +1.6% y/y versus +0.2% m/m, +1.3% y/y expected.

Chart 1: EUR/USD 1-minute Chart: Dec 14, 2016 Intraday

EUR/USD trended slightly lower falling as low as 1.0631 after the US economic data was released. Nevertheless, focus continues to be the much awaited Fed decision and economic assessment later in the day.

Read more: Preview for December FOMC Meeting as USD Holds Near 13-year Highs

--Written by Diego Colman, DailyFX Research

To contact Diego, email him at diego.colman@ig.com

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

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