US Dollar Gets No Support From Retail Sales Report

Market Reviews

US dollar stays weak after mixed data. The US Commerce Department reported that headline retail sales rose 0.6% mom in March, above expectation of 0.5%. This was compared to a 0.1% drop in the previous month. On annual basis, retail sales grew by 4.5% in March. Ex-auto sales rose 0.2% mom, in-line with consensus.

Empire State Manufacturing index tumbled sharply to 15.8 in April, down from 22.5 and missed expectation of 18.6. In particular, the index for future business conditions dived -26 pts to 18.3, hitting the lowest level in more than two years. That’s a sharp contrast to the reading back in February, at 44.1, which was a several year high.

Global stock markets were mixed. Nikkei rose by 0.26%. Hong Kong HSI closed down -1.60% but that was mainly due to worry on weakness of its currency. European indices are mixed with DAX and CAC relatively flat. FTSE declined by 0.45%. US futures point to slightly higher open. Gold remains bounded in tight range between 1340/50.

The British pound is growing amid the optimism of a rate hike of the Bank of England in May. The pound is trading as the strongest one today This week will be rich in important UK economic reports, including employment, CPI and retail sales. All of them will give the pound a further vector of movement. At the same time, experts note that the most likely growth of the pound against the dollar and the euro is most probable, as investors believe that the pound's value takes into account the excessively large "risk premium" associated with Brexit, especially if the UK exit from the euro zone passes under milder conditions.

Today, investors also focused on the comments of Minneapolis Fed President Neel Kashkari, who said that the government's recent moves to stimulate economic growth gave him the confidence that the Fed will soon reach the inflation target at around 2%. This will allow the central bank to continue the planned increases in interest rates.

Today’s data also showed that Swiss PPI fell by 0.2% mom, 2.0% yoy in March, below expectation of -0.4% mom, 2.6% yoy. German WPI rose 0.0% mom in March. UK Rightmove house price rose 0.4% mom in April.