Talking Points
- March US Advance Retail Sales miss at +0.9% m/m.
- Data shows US economy started to recover after winter weakness.
- EUR/USD jumps above $1.0600 after US yields fall.
After several weeks of disappointing US economic data (the Citi Economic Surprise Index started the day at -45.6), traders were seemingly hopeful that a strong consumption report for March would indicate that the weakness seen in economic reports could be attributed to inclement weather during the winter months. However, with the headline March retail sales figure coming in below expectations, traders have abruptly reversed the greenback’s recent rally, pressuring it to fresh weekly lows versus several of its major trading counterparts. The U.S. 10-Year Treasury-note yield, which started the day at 1.927%, traded below 1.870% in the minutes after the report; declining interest rate differentials are weighing on the US dollar.
Here’s a summary of the data this morning that’s responsible for US Dollar selling:
- USD Advance Retail Sales (MAR): +0.9% versus +1.1% expected, from -0.5% (revised higher from -0.6%) (m/m).
- USD Retail Sales ex Auto (MAR): +0.4% versus +0.7% expected, from 0.0% (revised higher from -0.1%) (m/m).
- USD Retail Sales Control Group (MAR): +0.3% versus +0.5% expected, from -0.2% (revised lower from 0.0%) (m/m).
Following the data, EUR/USD rallied from near-session lows of $1.0560 to as high as $1.0661 shortly thereafter. Broad US Dollar weakness was observed surrounding the print, with USD/JPY hitting fresh session lows below ¥119.50 and GBP/USD rallying above $1.4760, up over 100-pips from its daily lows.
--- Written by Christopher Vecchio, Currency Strategist