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US Dollar Spikes on Stellar Retail Sales, Gold Breaks Down to Key Support

US Dollar Spikes on Stellar Retail Sales, Gold Breaks Down to Key Support

Justin McQueen, Strategist

US Dollar Analysis & News

  • USD Surge Following Retail Sales, Hawkish Fed Up Next?
  • Stellar US Retail Sales

USD Surge Following Retail Sales, Hawkish Fed Up Next?

A stellar retail sales report takes the USD to fresh session highs and raises the probability of a more hawkish Fed at next week’s meeting. A beat across the board in the data where consensus had been looking for a contraction or flat. Now while the prior readings were revised lower, this has been shrugged off given the size of the beats in the latest figures. Most importantly, the retail sales control group reading rose 2.5% (vs -0.1% expected), which is noteworthy as it is used in several GDP trackers. Therefore, we may start to see US GDP forecasts upgraded.

Stellar US Retail Sales

US Dollar Spikes on Stellar Retail Sales, Gold Breaks Down to Key Support

Source: Refinitiv

Market Reaction: The greenback jumped on the back of the data, particularly against low yielders as US yields also ticked up. In the precious metals complex, gold took another leg lower to hit key support at 1760, which is a level that has been closely watched throughout the majority of the year. Meanwhile, US equities have seen marginal gains following the retail sales report. Going forward, with the Federal Reserve meeting set to take centre stage next week, I see the USD continuing its upside against low yielders (JPY & CHF).

USD, US 10Y Yield, Gold Reaction

US Dollar Spikes on Stellar Retail Sales, Gold Breaks Down to Key Support

Source: Refinitiv

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