Skip to content

XTB TRADEBEAT

US data beats expectations but core reading suggest caution

The latest retail and inflation data from the US have come in above forecasts but the core readings should serve as a sign of caution. Retail sales m/m rose by 0.6% in December, above the 0.5% forecast and far above the prior reading of 0.1%. However one shouldn’t be to quick to draw from this a strengthening in consumer spending as the core reading of 0.2% came in inline with the previous reading and missed the 0.5% rise expected.

 link do file download link

The month of December is typically strong for retail sales and as you can see from the chart below a strong finish to 2016 meant it was the second best year in terms of increases in the last 5 with only 2012 surpassing it.

link do file download link

 There is a fairly strong correlation between the retail sales figures and the conference board consumer confidence prints seen over the past five years and both these reading appear to be moving higher above the range of the previous two years. 

link do file download link

 As well as retail sales data there was also figures from the producer price index (PPI) which also surpassed expectations to come in at 0.3% m/m. A small rise of only 0.1% was expected after 0.4% last time. A larger than expected increase here adds to recent rises and provides more evidence that the inflationary pressures in the US are on the rise. The consumer price index (CPI) data is out next Wednesday at 1:30 GMT and this has previously shown a close correlation to the PPI number.  

 link do file download link

 The early reaction to these releases 30 minutes later in the market has seen some gains made for the US dollar, with USDJPY rallying more than 70 pips whilst Gold has fallen lower and moved back below the $1200/oz level. 

Disclaimer

This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.