The US$ generally traded lower by the end of the US session on the back of some very weak retail sales data. The headline figure fell by 1.2%, way below the expectation of a 0.1% mm rise, the largest decline in nine years since September 2009, while the ex-auto sales dropped by -1.8% versus expectation of 0.0% mm. On top of this, the headline US PPI slowed to 2.0% yy in January, down from 2.5% yy and missed expectation of 2.1% yy while the core PPI slowed to 2.6% yy, down from 2.7% yy but beat expectation of 2.5% yy.
While most currencies made some gains against the dollar, the exception was Cable, which traded to one-month lows after UK PM Theresa May lost a another Brexit vote in parliament, weakening her hand as she seeks to renegotiate her withdrawal agreement with the EU.
European data showed that Eurozone GDP grew 0.2% qq in Q4, unchanged from Q3 and matched expectations, but German GDP stagnated in Q4 and grew 0.0% qq, just enough to avoid a technical recession following a -0.2% contraction in Q3. The figures did little to help the Euro although it did squeeze higher following the US data miss.
In other markets, the metals rose by around 0.5%, underpinned by the weaker dollar while WTI also traded on a firm note, up by around 0.9%, but not before a sharp dip following the US data. Stocks also dipped lower on the release of the data but then recovered to finish the day pretty much unchanged.
Looking ahead, Friday will focus on the US/China trade talks but traders will also look to the China CPI (exp 0.5%, 1.9%yy) and PPI (exp 0.2%yy) for guidance. Later on we get the UK Retail Sales (exp 0.2%mm, 3.4%yy) the EU Trade Balance and some secondary US data; the York State Empire Mfg Index, Import/Export Index, Industrial Production (exp 0.1%), Capacity Utilisation (exp 78.7%) and the Michigan Consumer Sentiment Index. have a good weekend.
Economic data highlights will include:
Fri: NZ Business PMI, NZ Visitor Arrivals, China CPI, PPI, Japan Capacity Utilisation, Industrial Production, UK Retail Sales, EU Trade Balance, US New York State Empire Mfg Index, Import/Export Index, Industrial Production, Capacity Utilisation, Michigan Consumer Sentiment Index, Fed’s Bostic Speech.
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