US Retail Sales Data Helps USD Extend NY Session Gains

While the USD was pressured overnight, heading into today’s US reports, it perked up, especially against the JPY and GBP, and the EUR as well. US retail sales were stronger than expected, and producer prices showed a jump in inflation. That helped to support the USD further against the majors. In yesterday’s session and overnight, the USD had been squarely on the backfoot, as the EUR rebounded strongly following the weekend.

Best Buy Earnings Drive some Risk Aversion

The first move in favor of the greenback came as US retailing giant Best Buy reported much weaker Q3 earnings. That injected some risk aversion into currency markets, and with the USD oversold in the short term, we saw investor sentiment regarding the USD switch. The stronger data helps support the data as it implies a stronger recovery and less need for the Fed to do more rounds of quantitative easing.

US Retail Sales Top Expectations

Retail sales in the US rose 0.8% in November, which topped forecasts of a 0.6% rise.



Here’s a chart and we see that the past 5 months (gray bars) retail sales have posted strong monthly increases. Sales in November were revised higher to 1.7%, from previously estimated 1.2% increase.

Excluding autos, sales sales were up 1.2%, topping expectations for a gain of 0.7%. That’s a good report and a good start to the holiday shopping season for the US.

It also continues to reinforce part of the story around the US economy which is a pick up in momentum in consumer spending, which powers most of the economy. So this was a USD positive event.
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