US Dollar Rally Nicked by Mixed September Retail Sales

DailyFX

Talking Points:

- First contraction in Advance Retail Sales in 2013.

- Decline suggests that consumers curtailed spending ahead of government shutdown.

- US Dollar edges higher against Yen, but weakens elsewhere.

Risk-appetite has improved ahead of the US cash equity open on the back of mixed US consumption data, which has proven both positive and negative for the US Dollar. On the headlines, the Advance Retail Sales report for September was a touch weaker than expected, yet there was no major fallout ahead of the US government shutdown. Nevertheless, the data showed that consumption – the backbone of the US economy – is starting to slow.

The data hasn’t been too USD-negative thus far; it seems that market participants, in the back of their minds, collectively believed that the sales report might have been worse off than forecasts called for. Yet the data points to a weaker US economy, helping support the idea that the Federal Reserve will maintain its expansive QE3 program.

Here’s the data:

- Advance Retail Sales (SEP): -0.1% versus 0.0% expected, from +0.2% (m/m).

- Retail Sales ex Auto (SEP): +0.4% as expected, from +0.1% (m/m).

- Retail Sales ex Auto & Gas (SEP): +0.5% versus +0.4% expected, from +0.2% (m/m).

AUDUSD 1-minute Chart: October 29, 2013

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Mixed_Retail_Sales_Offer_Pause_in_USD_Selling_JPY_Buying__body_x0000_i1027.png, US Dollar Rally Nicked by Mixed September Retail Sales

Charts Created using Marketscopeprepared by Christopher Vecchio

Following the US consumption data, the USDJPY initially rallied from ¥97.87 to as high as 97.99, but was trading back at 97.92, at the time this report was written. Similar price action was observed elsewhere, with the AUDUSD trading from $0.9493 to as high as 0.9502 and as low as 0.9486.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

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