U.S. Dollar Weakens As Retail Sales Contract
OCTOBER 16, 2019
The U.S. dollar traded in a mixed direction overnight. But the greenback has taken a decisive turn weaker in early trading following surprisingly poor domestic economic data.
U.S. retail sales turned negative for the first time in seven months. The headline print came in -0.3%, failing to meet expectations of a 0.3% rise. Consumer spending has propped up the economy in recent months so this morning’s disappointing reading could be a warning sign of a pending slowdown. The “control group” registered at 0.0%, also failing to hit expectations of a 0.3% gain. The silver lining is that last month’s reading was upwardly revised.
While the economic docket is quiet for the rest of the day, there are a number of Fed speakers who again can move the market. The Fed’s Charles Evans will discuss monetary policy and the economy in general in Illinois at 10:45 a.m. Kaplan and Brainard will speak this afternoon at separate events.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
The Euro strengthened modestly overnight but has since given back some of its gains. The common currency found support after a report said that officials from Chancellor Angela Merkel’s part would consider fiscal stimulus should German growth take further hits.
The economic docket was fairly slow but Italian industrial orders fell 10% year over year in August, a concerning sign for the group’s third-largest economy and more evidence the trade war is negatively affecting growth.
The British pound sterling continues to whiplash between gains and losses. The sterling initially lost ground overnight as optimism surrounding a last-minute Brexit deal cooled. But the sterling has popped higher this morning, coinciding with poor U.S. data. The sterling is now 5% stronger versus the U.S. dollar since last Thursday and is currently at its strongest level since May. Expect GBP/USD to trade at the whim of Brexit related headlines as negotiators try to hammer out a deal by Thursday.