Talking Points:
- US consumption a touch slower than expected, reflecting a weak holiday for retailers.
- Auto sales increased by +2.4% m/m; ex-Auto & Gas, retail sales were flat.
- US Dollar initially gains, but mixed report overall tempers rally.
The US economy closed out the year on a modest note, according to the latest consumption data released by the US Commerce Department today. Advance Retail Sales, perhaps the best proxy for the largest portion of GDP – with consumption accounting for nearly 70% of the headline – proved strong in December, although not as strong as the market was expecting. The headline figure came in at +0.6% m/m, a shade below the +0.7% m/m forecast according to Bloomberg News. The primary factor in the gains were auto sales, which were up by +2.4% m/m overall; ex-auto & gasoline, retail sales were flat in December.
As the last retail sales report of 2016, we now have the benefit of looking back at the year in total. Advance Retail Sales rebounded overall in 2016, up by +3.3% y/y, faster than the +2.3% y/y rate of growth seen in 2015. However, consumption growth remains below the pace seen in 2014, which was +4.2% y/y. It should be noted that a strong finish to the year for retail sales may prove to be the difference between a solid Q4’16 GDP reading and a mediocre one.
Here are the data driving the US Dollar this morning:
- USD Advance Retail Sales (DEC): +0.6% versus +0.7% expected, from +0.2% (m/m).
- USD Retail Sales Less Autos (DEC): +0.2% versus +0.5% expected, from +0.3% (m/m).
- USD Retail Sales Ex Auto and Gas (DEC): 0.0% versus +0.4% expected, from +0.3% (m/m).
- USD Retail Sales Control Group (DEC): +0.2% versus +0.4% expected, from +0.1% (m/m).
See the DailyFX economic calendar for Friday, January 13, 2017
Chart 1: EUR/USD 1-minute Chart (January 13, 2017 Intraday)
Immediately following the data, the US Dollar traded higher against most major currencies. EUR/USD traded in a choppy 52-pip range between 1.0620 and 1.0672, moving from 1.0659 ahead of the release to around 1.0651. USD/JPY experienced a similar reaction, gaining from 114.37 ahead of the release to 114.86 at the time this report was written.
Read more: USD Needs Strong Data Today to Stave Off Pullback
--- Written by Christopher Vecchio, Senior Currency Strategist
To contact Christopher, email him at cvecchio@dailyfx.com.
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