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Jun 18 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Receives Limited Lift From Soft US Retail Sales

By Burton Frierson  —  Jun 18 - 02:10 PM

The dollar was little changed against most majors, except for sharp losses versus the Australian dollar, as investors weighed evidence of a softening U.S. economy against political uncertainty in Europe, producing a mixed outlook across key currency pairs.

retail sales grew just 0.1% in May, disappointing the Reuters consensus forecast for a 0.3% advance, while a downward revision to a 0.2% drop for April emphasized the softness in the data.
The control series rose 0.4% last month as expected, but April was revised down to show a drop of 0.5%.

industrial production rose more than expected, alleviating some of the dollar weakness, but retail sales was the bigger catalyst of the session.

EUR/USD rose from near the day's low of 1.0710 following the retail sales headlines to a peak of 1.07615 during the U.S. morning before the lift subsided.
It remains below the 10-, 21-, 55- and 200-day moving averages following its slide from the June 4 high of 1.0916.

GBP/USD bounced off support at 1.2669 after the U.S. retail sales report as Treasury yields dipped.
The lows of the last three sessions -- 1.2669, 1.2660 and 1.2658 -- are providing support.
Resistance comes in at Tuesday's high of 1.2720 and falling 10-DMA at 1.2742.

Key events up ahead for sterling are Wednesday's UK CPI and Thursday's BoE meeting.

Falling Treasury yields after U.S. retail sales took USD/JPY lower, from Tuesday's high of 158.22 to 157.52 before returning to the 157.80s.
Resistance resides in the mid-158.20s, near Tuesday and Friday's highs.

Markets are wary of potential MoF intervention as the 160.00 level nears.
Lower Fed rate expectations and a diminishing U.S. yield advantage are weighing on USD/JPY.
Risks are still tipped to upside barring a concrete move by the BoJ and MoF, on the one hand, or Fed on the other.

In the wake of a hawkish hold form the RBA that come much as expected, AUD/USD capitalized on the soft U.S. yields that took hold following the U.S. retail sales report, though it remained trapped in its broad 0.6580-0.6710 range.

In a busy day for Fed speak, policymakers largely stuck to optimism that rates can gradually come down at some point but that more time is needed to observe data and gain confidence that inflation is coming down.

Treasury yields fell roughly 5-6bp on the day, and the S&P 500 was up 0.27% in New York afternoon trade.

WTI rose 0.8%, copper advanced 0.93% and gold firmed 0.43%.

In afternoon trade: EUR/USD flat, USD/JPY +0.1%, GBP/USD -0.03%, AUD/USD +0.57%.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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