April's Retail Sales Weaken Dollar

 

USD

The U.S. traded in tight ranges overnight, a trend that has become familiar this week. The greenback failed to react to yesterday’s jobless claims that showed continued positive signs for the nation’s labor market. Indeed, continuing claims were at their lowest in 30 years.

This morning’s data may provide a catalyst for volatility. The greenback is losing slightly as retail sales failed to meet estimates. Total sales registered at 0.4% in April, missing expectations of a 0.6% rise. The ex-auto print also underwhelmed. However, the positive growth will be seen as bright spot for the U.S. economy as a seasonal slowdown in March can be written off as a one-off. Indeed, March’s number was upwardly revised to 0.1% from a previous reading of a 0.2% contraction. A separate report showed that inflation pressures remain constant in the economy. Year of year CPI is currently at 2.2%, mostly in line with the Fed’s goal of 2.0%.

Later, the Federal Reserve’s Evans and Harker will speak but may draw less attention on a Friday afternoon.

 

EUR 

The Euro failed to improve on good data and is set for its first weekly decline in over a month versus the U.S. dollar. German gross domestic product rose 0.6% in the first quarter and registered a 1.7% gain. The pace for the fourth quarter was upwardly revised to 1.8%. The strong German data was apparently washed out by disappointing Eurozone industrial production. The -0.1% print failed to meet estimates of a sluggish 0.3% gain.

The Euro had gained for fourth straight week versus the U.S. dollar leading up to the French election. However, this Euro appears to have reached a top and is settling into new, lower ranges against the U.S. dollar.

 

GBP 

The British pound extended its decline from yesterday overnight, moving below key technical support levels. The sterling’s sell-off began yesterday as “Super Thursday” proved to be mostly a non-event. BoE policy makers seem set on the status-quo on rates despite rising inflation. The vote did show a split 7-1 in favor of keeping policy unchanged. Further splits will be seen as a move towards tightening and likely boost the sterling.