Article Highlights

  • U.S. headline retail sales up 1.3% vs. expected 0.8% increase
  • U.S. core retail sales up 0.8% vs. 0.5% forecast
  • U.S. headline PPI up 0.2% vs. estimated 0.3% gain
  • U.S. core PPI posted 0.1% uptick as expected
  • U.S. prelim UoM consumer sentiment index rose from 89.0 to 95.8
  • Chinese industrial production up 6.0% y/y vs. 6.5% forecast
  • Chinese fixed asset investment up 10.5% y/y vs. 11.0% forecast
  • Chinese retail sales up 10.1% y/y vs. 10.6% forecast
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Thanks to mostly stronger than expected economic reports, the U.S. dollar was able to chalk up gains against its forex rivals.

Major Events:

Upbeat U.S. economic data – So much for a consumer sector slowdown! While the latest earnings releases from Macy’s, Nordstrom, and JC Penney indicated a slump for the first quarter, the April retail sales figures showed quite a rebound. Headline retail sales surged 1.3%, which is much faster than the estimated 0.8% increase while core retail sales advanced 0.8%, higher than the projected 0.5% gain.

To top it off, sentiment has also been upbeat, as the preliminary index from the University of Michigan climbed from 89.0 to 95.8 for May. PPI readings came in mixed, as the headline figure narrowly missed expectations with a 0.2% increase versus the 0.3% consensus while the core figure posted a 0.1% uptick as expected.

Weekend data from China – I’m seeing red! But instead of bringing good fortune, the latest batch of reports from the world’s second largest economy could bring the gloom and doom back in the markets. Industrial production posted a 6.0% year-over-year gain for April, way lower than the estimated 6.5% increase, while retail sales came short with a 10.1% year-over-year increase instead of the projected 10.6% rise. Fixed asset investment also reflected a slowdown at 10.5% versus the projected 11.0% reading.

Major Currency Movers:

USD – The U.S. dollar followed up with its recovery from the previous trading sessions to end significantly higher against most of its counterparts on Friday.

EUR/USD broke below the 1.1350 support to a low of 1.1283, GBP/USD is down to the 1.4350 minor psychological level, USD/CHF popped up to a high of .9775, and USD/JPY tested the resistance at 109.50 once more.

AUD – Aussie traders seem to have gotten some clues about the outcome of the Chinese reports as it kept edging lower throughout the day.

AUD/USD is down to .7270, AUD/JPY dropped to a low of 78.98, EUR/AUD is trying to break past the 1.5550 handle, and GBP/AUD sailed past 1.9700 to close at 1.9767.

Watch Out For:

  • 6:00 am GMT: Japanese preliminary machine tool orders (-21.2% previous)

See also:

Asian Session Recap

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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