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Video for May 13th, 2008 (5 min): Dollar Stronger Overnight vs Euro, Bolstered in NY Trading by Better Than Expected Core Retail Sales
UK RICS House Price Deteriorates to -95%, BRC Retail Sales Down 1.5% on the Year
In the UK, the RICS House Price Balance showed that close 95.1% of surveyors reported that they saw lower housing prices. Though prices are lower, the survey does not convey how much prices have fallen, but rather how broadly the market is being affected. Also, last evening, the BRC retail sales monitor showed sales falling by 1.5% compared to April of last year. It's the second month in a row that the indicator was negative and is a sign that consumers are less willing to spend. UK Consumer Inflation Up 3% in Annual Terms, 0.8% on the Month Overnight, the UK released consumer inflation data, which proved to be red hot in April. The annual rate increased 3%, with "core" inflation up 1.4%. Both figures were above expectations. Inflation was 0.8% higher on a monthly basis, the biggest increase in nearly 7 years. UK Retail Prices Rise 4.2% in Annual Terms The retail price index, which measures the cost of living used in salary negotiations, grew by an annual pace of 4.2% in April, the fastest since November. Following yesterday's producer inflation results it will be interesting to see whether the central bank follows through on its planned rate cut for the next meeting. GBP/USD - Dollar Gains On Pound, Despite Spike Following CPI Data
The Pound-Dollar was trading lower coming into the release. It rallied to touch 1.9590 in a knee jerk reaction, but pared those gains rather quickly. The Dollar strengthened in the first half of NY trading, as a result of better than expected retail sales from the US. The pair found support near 1.9420 where it set an intra-day low. US Retail Sales Down 0.2%, Core Up 0.5% in April Retail sales in the US for April were down 0.2% overall, matching forecasts, but "core" retail sales which exclude auto sales, rose 0.5%. Also, March's core retail sales growth was revised up significantly from 0.1% to 0.4%. Car sales fell 2.8% over the month and were the main drag on the sales figure. US Import Prices Reach 15.4% Pace in Annual Terms, Highest Since at Least 1982 Import prices in the US for April rose 15.4% on the year, and 1.8% on the month. The annual rise was the fastest since records began in 1982. Petroleum led the charge up a whopping 57% since last year. Excluding oil, prices were still up rather steeply implying that a weaker Dollar is making foreign goods, such as cars and capital goods more expensive. US Business Inventories Grow 0.1% In a third and final report, business inventories grew at a slower pace than expected in March, climbing 0.1%. Firms are trying to be light on inventories in anticipation of slowing demand. USD/JPY - Dollar Boosted vs Yen By Retail Sales Data
The Retail sales data boosted the Dollar-Yen pair, which rallied 90 pips after the release to set a peak at 104.75. The pair then receded, finding some support at 104.30 in mid NY trading. From there, the Dollar strengthened again retesting its high from earlier in the morning. In the last two sessions the Dollar managed now to claw back most of its losses from late last week. GBP/JPY - Pound Rallies 230 Pips Following UK CPI and US Retail Sales
The Pound-Yen pair was pressured overnight as UK stocks performed poorly following its inflation report. The pair had dropped 200 pips from its high yesterday. As NY trading got underway, the Pound found support at 101.50, and rallied 200 pips the other direction, touching just above Monday's high. EUR/USD - Dollar Gains Overnight, Euro Finds Support at 1.5430
The Euro-Dollar pair was lower overnight, and continued its decline following the US retail sales data, setting an intra-day low near 1.5430. From here the pair recovered and was consolidating near 1.55 as US stocks were trading in the red in the morning, weakening the Dollar. USD/CAD - Loonie Reaches Parity, Greenback Bounces off Support
The US Dollar-Canadian Dollar pair fell overnight, reaching parity in mid-NY trading. The greenback, like it has several times the past month found support at the 1 to 1 level and rallied to erase some of its earlier losses. From its peak on Friday, the pair was down 180 pips at its intra-day low. Upcoming Releases Tonight, Japan releases inflation data for corporate goods, and its current account balance. Australia will reveal consumer confidence data and its wage price index for the 1st quarter. Overnight the UK reveals its unemployment report and its quarterly inflation report and the Euro-zone releases industrial data for March. Tomorrow morning the US will post its consumer price data. |
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