EURUSD, H1
The dollar fell following the mix of data, which saw retail sales marginally better than forecast, overall, and on an ex-auto basis. Headline CPI was very close to expectations, though the core reading missed by a tenth. With the Fed showing concern over persistently low inflation, the cooler CPI outcome appears to have been the FX driver. EURUSD spiked to 1.1872 from under 1.1810, as USDJPY slid to 111.71 from 112.25.
U.S. retail sales climbed 1.6% in September, with sales ex-autos up 1.0%, both a little stronger than forecast. But, the 0.2% decline in August headline sales was nudged up to -0.1%, and the ex-auto gain was revised up to 0.5% from 0.2% previously.
U.S. CPI rose 0.5%, with the core rate up 0.1% in September. not as hot as feared after the PPI jump yesterday. August gains of 0.4% overall and 0.2% on the core were not revised. Compared to last year, the headline number rose to a 2.2% y/y pace, versus 1.9% y/y previously, while the ex-food and energy component was steady at 1.7% y/y. The components showed energy led the uptick, climbing 6.1% after the prior 2.8% gain. Transportation increased 2.8%, while commodities were up 1.1%. Aside from those, gains were more modest. Food prices increased 0.1%. Housing costs edged up 0.2%, as did the owner equivalent rent measure. Medical care and apparel prices each fell 0.1%. Data should give Treasuries a boost.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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