Article Highlights

  • US retail sales: -0.9% vs. -0.1% expected, last month’s data revised lower
  • US retail sales ex-autos and gas: -1.0% vs. 0.1% expected, 0.1% previous month’s data revised lower
  • US beige book report: economy is growing, but falling oil prices are starting to affect oil service firms
  • Carney: falling oil prices “net positive” for the U.K.
  • USD shrugs off weak retail sales reports
  • Oil shoots up by 5% from 5.5-year low
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High-yielding currencies dominated the forex market during the U.S. session after oil prices bounced and Uncle Sam printed a weaker-than-expected retail sales report.

Headline U.S. retail sales fell by 0.9% in December, which is not only weaker than analyst estimates, but is also the data’s largest drop in eleven months. Not only that, but November’s numbers growth figure was also revised from 0.7% to 0.4%.

What worried forex traders more though, is that the core reading, which already excludes falling oil prices, is still lower than market expectations and its November numbers were also revised lower. Last but not the least is the Fed’s Beige Book report, which reflected that while the economy is still growing, the recent decline in oil prices is starting to affect oil service firms and its hiring practices.

The dollar took hits across the board with EUR/USD popping up to a high of 1.1846 before settling at 1.1789. GBP/USD also had a good trading session with its 56-pip climb to 1.5136. Even the comdolls gained pips on the dollar with AUD/USD rising by 33 pips to .8157 and NZD/USD inching 13 pips higher to .7725.

Oil was also among the headline makers, as crude oil prices jumped from a 5.5-year low and staged a 5%+ recovery before settling at around $48.48. The Loonie’s reaction was muted though, with USD/CAD only down by 32 pips to 1.1945, CAD/JPY up by 59 pips to 98.19, and GBP/CAD only slipping by 17 pips to 1.7812.

Another notable move was the uptick of yen crosses across the board. With the European Union Court of Justice deciding that the ECB’s OMT program is legit, BOE’s Mark Carney making optimistic statements, and oil prices surging, high-yielding currencies gained pips against the low-yielding yen.

USD/JPY jumped by 41 pips to 117.30, EUR/JPY shot up by 86 pips to 138.28, and GBP/JPY rose by a whopping 119 pips to 178.71.

Will risk appetite carry over to today’s Asian session forex trading? A while ago Australia had printed its jobs numbers, which reflected a 6.1% unemployment rate (vs. 6.3% expected) and a net addition of 37,400 workers who found jobs (vs. 5,000 expected). The Aussie has already gotten support from currency bulls, but stick around in case the comdolls gain momentum and dictate today’s risk sentiment.

Good luck!

See also:

London Session Recap

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