THE TAKEAWAY: Core and headline figures miss and prior revisions fail to offset, August report has slightly negative tone > Consumption trends in US steadying at low level, signifying slowing growth > EURUSD BULLISH
US economic data has been disappointing in recent weeks (especially on the ever-important inflation and labor market fronts), and the release of August consumption figures has done little to firm the tone regarding the US economy. The August Advance Retail Sales report showed that consumption is only moving forward at a modest pace, in part because the uptick in US interest rates is sapping purchasing power overall.
The headline figure came in weaker than expected at +0.2% m/m, but the prior revision up by two-tenths to +0.4% m/m negated some of the disappointment. An equally important indicator of US consumption – the Retail Sales Control Group, as it is the figure used to compute GDP – eased to +0.2% m/m from +0.5% m/m.
US Treasury yields have fallen on the news (the 10-year note yield decreased from 2.934% to 2.890% at the time this report was written), while precious metals have rallied, and the US Dollar has eased – a clear indication of investors realigning their bias towards the Federal Reserve offering only a minor step down in QE3 in September.
Here are the figures stoking US Dollar weakness:
- Advance Retail Sales (AUG): +0.2% versus +0.5% expected, from +0.4% (revised higher from +0.2% (m/m)
- Sales ex Auto (AUG): +0.1% versus +0.3% expected, from +0.6% (revised higher from +0.5%) (m/m)
- Sales ex Auto & Gas (AUG): +0.1% versus +0.3% expected, from +0.6% (revised higher from +0.4%) (m/m)
EURUSD 1-minute Chart: September 13, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the report, the EURUSD rallied immediately from $1.3292 to as high as 1.3321. However, as it became clear that the headline figures were misleading in context of the prior revisions, price began to retrace and the EURUSD was last quoted at 1.3305, at the time this report was written.
--- Written by Christopher Vecchio, Currency Analyst
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