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Traders still showed no love for the dollar, even on Valentine’s Day no less! Dollar bears painted the town red as U.S. economic reports came in mixed.

  • U.S. headline CPI up 0.5% vs. 0.3% consensus in January
  • U.S. core CPI up 0.3% vs. estimated 0.2% uptick
  • U.S. headline retail sales slumped 0.3% vs. projected 0.2% gain
  • U.S. core retail sales flat in January vs. projected 0.5% increase
  • U.S. Dec headline retail sales downgraded from 0.4% to 0.0%
  • U.S. Dec core retail sales revised down from 0.4% to 0.1%
  • U.S. business inventories increased by 0.4% vs. projected 0.3% rise
  • EIA crude oil inventories rose by 1.8M barrels vs. 2.8M forecast

Major Events/Reports

Mostly downbeat U.S. data

‘Twas a mix of greens and reds for Uncle Sam as economic figures printed both upside and downside surprises. The Greenback actually drew a bit of support from positive CPI readings, with the headline figure up 0.5% versus the 0.3% consensus and the core reading increasing by 0.3% versus the 0.2% uptick.

Components of the inflation report revealed that the price gains were broad-based across indexes for gasoline, shelter, apparel, medical care, and food. In particular, the increase in energy prices made up for the declines in the remaining indices.

On the flip side, consumer spending data turned out to be a disappointment as headline retail sales sank 0.3% in January instead of rising by 0.2% while the core figure was flat. To top it off, the December readings suffered downgrades to show that spending over the holidays wasn’t as strong as initially reported.

Since consumer spending accounts for a huge chunk of GDP, most number crunchers quickly downgraded GDP forecasts for the first quarter as a result.

A few hours later, the business inventories report revealed a 0.4% buildup, higher than the estimated 0.3% increase. This suggests that companies kept more goods in inventory during the month and probably won’t need to spend more on replenishing depleted stockpiles anytime soon.

Risk appetite still present

Just as in the previous session, risk-taking was the name of the game, supporting equities, commodities, and other higher-yielding assets.

  • Dow 30 index is up 253.04 points to 24,893.49 (+1.03%)
  • S&P 500 index is up 35.69 points to 2,698.63 (+1.34%)
  • Nasdaq is up 130.10 points to 7,143.61 (+1.86%)

Crude oil got a boost from a smaller than expected build in stockpiles as reported by the Energy Information Administration. Precious metals were in the red as traders dumped safe-haven holdings.

  • WTI crude oil is up to $60.73 per barrel (+0.21%)
  • Brent crude oil is up to $64.38 per barrel
  • Gold is down to $1,354.60 per troy ounce (0.25%)

Major Market Mover(s):

USD

It was a blood red Valentine’s Day for the dollar as bulls barely gained any traction and a combination of weaker Fed rate hike hopes and risk-taking dragged the U.S. currency down.

EUR/USD popped up from a low of 1.2275 to a high of 1.2465, GBP/USD bounced back to the 1.4000 handle, USD/JPY continued to slide to a low of 106.72, and USD/CHF is down to .9287

JPY

The lower-yielding yen also returned some of its gains from earlier in the day, except against the dollar, as traders had stronger appetite for higher-yielding currencies.

EUR/JPY climbed from a low of 131.60 to a high of 133.39, GBP/JPY bounced to a high of 150.03, AUD/JPY is up to 84.88, and CAD/JPY recovered to 85.40.

Watch Out For:

  • 12:30 am GMT: Australian employment change (15.3K expected, 34.7K prevoius)
  • 4:30 am GMT: Japanese revised industrial production
  • Chinese banks closed for the holiday