Daily Market Update

U.S. Dollar Regains Strength Based on Retail Sales and More

May 15, 2018

The U.S. Dollar is trading in much more favorable ranges this morning as positive data has once more benefited the currency’s value as the economic outlook improves.

USD

Retails Sales were released showing an expansion of 0.3% for April as expected, but additionally all figures for March were revised upward. Furthermore, Empire State Manufacturing Survey registered at 20.1 over 15.0, indicating confidence amongst businesses in the New York region.

The buck’s advancement also coincides with negative Gross Domestic Product data figures out of Germany, the Euro-zone’s largest economy, which is slowing down a bit. Pound is also retreating after the U.S. yield on 10-year treasury bonds increased to 3.03%, highlighting the prospect for higher interest rates here in comparison to anywhere else.

 

EUR

The Euro fell as a result of weak economic indicators across the region in the form of GDP and Industrial Production. The latter’s expansion came in at 0.5% for April when 0.7% was estimated. After a few slow months, the measure of output has fallen now to an average annual level of growth of 3.0% from 3.6%.

Meanwhile, German GDP only rose by 0.3% first quarter of the year, instead of 0.4% forecast. We will see if Consumer Price Index numbers tomorrow give further reason for concern over economic performance and weighs on the shared currency.

 

GBP

The Pound started sliding as Brexit concerns remain and average weekly earnings underwhelmed. The income figure came in at 2.6% as expected, but economists wanted to see a higher level, especially since unemployment sits at historic lows. More importantly, without a significant increase in the amount people take home, spending is under threat.

Recent reviews of the amount of money hold in banks has not increased in the past six months, perhaps a sign of people using credit and staying put on purchases as has been revealed by Retail Sales as well. We foresee more pain for Sterling as this goes on.

 

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