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Retail sales miss but revisions see USD gain; Gold breaks key 1300 level

Summary:

  • US retail sales M/M 0.3% vs 0.4% exp 
  • Prior reading revised higher to 0.8% (from 0.6%)
  • USD continues to rise; Gold falls below key support at 1300

What initially seemed like a soft data point from the US has in fact boosted the US dollar with some notable revisions to the prior readings painting today’s numbers in a different light. The retail sales m/m came in at 0.3% against consensus forecasts of 0.4%, marking the 4th time in 5 that this metric has disappointed. However, the prior reading of 0.6% was revised upwards to 0.8%. In Y/Y terms. 

The core reading followed a similar pattern, with the print for April coming in at 0.3% - below the 0.5% expected and marking the 3rd time in the past 4 releases this has missed. However, the key again was the revision, with the prior reading of 0.2% revised higher to 0.4%.  

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 US retail sales pulled back a little in the month of April but remains pretty elevated compared to recent years. Source: XTB Macrobond

The US dollar was moving higher already on the day before the data hit, and the buck has continued to rise after the releases, showing gains across the board. The CHF is the best performing currency against USD in losing just 0.3% today with the USDJPY and EURUSD down 0.5% and 0.6% respectively. 

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 USD is rising across the board after the data. Source: xStation

Gold is sensitive to US data and the US dollar and there’s also been a potentially significant move in the precious metal today since the data was released. The market has dropped below the big psychological level of 1300 and in doing so broken a potentially key support. This level has provided a floor for price on several occasions throughout 2018 and now that it has broken there could be a sustained push lower. It is worth keeping in mind that the daily candle remains open and therefore the breakout is not yet confirmed, but should price end the day below 1301 then it opens up the possibility of a larger move lower. 

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 Gold has made an attempted break lower in moving below the 1300 handle to hit a 2018 low. Source: xStation

 

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