Market Wrap – US Retail Sales Up

Sentiment returned to positive to close the week out after US retail sales were stronger in United States than anticipated and came in at +0.8% compared to +0.3% expected.

The release was way above economists estimate, however, the positivity from the release was slightly tempered by the revisions to the prior month to -0.3% from 0.0%.

After the release the market seems to have shifted to favouring 100 bps hike from the Federal Reserve as the United States economy appears to be in not the dire shape some feared.

The Implied pricing is now 27% of 100 bps according to the FED’s Funds Rate. The bond market action is also interesting as US 2-year yields are also back to 3.11% after touching as high as 3.18%.

In terms of other market moving data today from the United States the NYC Manufacturing Index came in stronger than expected with an 11.1 print, which wildly beat expectations of -2.

The Michigan Survey from the United States came in at 51.1 against expectations of 49.9. Data revealed that Prior was 50.0. Current conditions 57.1 vs 52.5 expected.

Inside the report it showed that were at Expectations vs 47.0 as expected, while the prior was 47.5. 1-year inflation 5.2% vs 5.3% prior, while 5-10 year inflation 2.8% vs 3.1% prior.

On the negative from US Industrial Production came in at -0.2 percent, which was worse than the +0.1 % expected by the market.

As the European session wraps up we are not seeing any major in the US dollar index on the back of the retail sales release. In fact the US dollar index is limping slightly in the finish.

The EURUSD pair has moved above parity again after yesterday’s slump below parity and we are also seeing the USDJPY pair giving back gains alongside the USDCHF pair, which is normally a mirror of EURUSD.