Article Highlights

  • U.S. headline retail sales down 0.3% in August vs. projected 0.1% dip
  • U.S. core retail sales fell 0.1% vs. estimated 0.3% gain
  • Philly Fed manufacturing index up from 2.0 to 12.8 vs. 1.1 forecast
  • U.S. initial jobless claims at 260K vs. 262K forecast, 259K previous
  • U.S. headline PPI flat, core PPI up 0.1% as expected
  • Empire State manufacturing index up from -4.2 to -2.0 vs. -0.9 consensus
  • U.S. industrial production slowed 0.4% vs. projected 0.2% drop
  • U.S. business inventories flat vs. estimated 0.1% uptick
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Uncle Sam’s data dump turned out mostly weaker than expected, dampening Fed rate hike hopes once more. Here’s how it all turned out.

Major Events:

U.S. retail sales figures – Folks in the U.S. didn’t seem to be in the mood for shopping as consumer spending lagged in August. Headline retail sales slipped 0.3% for the month, sharper than the estimated 0.1% decline, while core retail sales fell 0.1% instead of showing the projected 0.3% gain.

Components of the report revealed that most retail segments chalked up weaker activity, causing the headline figure to post its first negative reading since March this year. Only restaurants and apparel stores reported gains, supported by back-to-school sales. Even online shopping was down as e-commerce activity saw its first loss since early 2015.

Improvements in U.S. manufacturing – The manufacturing industry saw some green shoots after a month of downbeat readings. The Philly Fed manufacturing index jumped from 2.0 to 12.8 this month, reflecting a much stronger pace of industry growth instead of slipping to the estimated 1.1 figure. Meanwhile, the Empire State manufacturing index rose from -4.2 to -2.0 this September, indicating a slightly slower pace of industry contraction but still shy of the consensus at -0.9.

Mixed U.S. PPI readings – The August PPI report was a mixed bag, as the headline figure posted a weaker than expected flat reading versus the projected 0.1% uptick while the core reading came in line with expectations of a 0.1% increase. Fuel prices were down for the month but other underlying components posted gains despite the stronger dollar, hinting at a bit of positive momentum in price levels.

Major Market Movers:

USD – U.S. economic data failed to impress, forcing the U.S. dollar to retreat against its counterparts once more.

USD/JPY fell from 102.30 to 102.18 (-0.12%), EUR/USD climbed from 1.1247 to a high of 1.1285 but closed at 1.1245 (-0.01%), GBP/USD is up from 1.3200 to 1.3243 (+0.33%), USD/CHF dropped from .9730 to a low of .9694 (-0.37%), and AUD/USD is up from .7476 to .7512 (+0.48%).

Watch Out For:

  • Chinese banks closed for the Mid-Autumn Festival holiday

See also:

London Session Recap

Asian Session Recap

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