European Session – Sterling jumps after retail sales smash expectations
January 17, 2014 2:23 pm
Sterling was the star performer of the day following the release of much higher-than-expected retail sales for December.
The data showed that UK consumers ratcheted up their spending in the run-up and during the Christmas period. The month-on-month increase was 2.6% compared to a 0.3% increase the previous month and much higher than a 0.4% rise that was expected by economists. The year-on-year increase was 5.3% in inflation-adjusted terms, while in October the annual rate of increase was 1.8%.
The pound jumped 1 entire cent higher against the dollar, as cable reached 1.6440 from 1.6340 prior to the release. Sterling was trading at 1.6444, up 0.70% on the session.
The pound was also very strong against the euro, as the euro fell 0.98% to trade at 0.8254, which was an 8-day low for the euro.
Sterling had a weak start to 2014, but this surprising statistic – if followed by other indicators which also show a stronger UK economy, could eventually lead to a turnaround in the pound’s fortunes.
The euro was weak against the dollar, dipping below the 1.36 level – probably because of optimism about the US economy as there was little concrete news out of the Eurozone. There was a rise again in 3-month money-market rates for the euro, indicating tighter liquidity in the Eurozone, which could encourage the ECB to come to the market’s help.
The euro dropped 0.27% against the dollar to trade at 1.3577. The euro also retreated against the yen, falling by 0.37% to trade at 141.55.
The dollar continued to be range-bound versus the yen, trading down just 0.09% to 104.26.
In US statistics, housing starts for December met expectations but were 9.8% lower month-on-month because of cold weather that slowed down construction. Building permits for the same month slightly missed expectations, dropping 3% from the previous month. Industrial and manufacturing output and capacity utilization for December either met or slightly exceeded expectations, justifying economic optimism for the world’s largest economy.
Traders were expecting University of Michigan preliminary consumer sentiment for January later in the session.
Sterling was the star performer of the day following the release of much higher-than-expected retail sales for December.
The data showed that UK consumers ratcheted up their spending in the run-up and during the Christmas period. The month-on-month increase was 2.6% compared to a 0.3% increase the previous month and much higher than a 0.4% rise that was expected by economists. The year-on-year increase was 5.3% in inflation-adjusted terms, while in October the annual rate of increase was 1.8%.
The pound jumped 1 entire cent higher against the dollar, as cable reached 1.6440 from 1.6340 prior to the release. Sterling was trading at 1.6444, up 0.70% on the session.
The pound was also very strong against the euro, as the euro fell 0.98% to trade at 0.8254, which was an 8-day low for the euro.
Sterling had a weak start to 2014, but this surprising statistic – if followed by other indicators which also show a stronger UK economy, could eventually lead to a turnaround in the pound’s fortunes.
The euro was weak against the dollar, dipping below the 1.36 level – probably because of optimism about the US economy as there was little concrete news out of the Eurozone. There was a rise again in 3-month money-market rates for the euro, indicating tighter liquidity in the Eurozone, which could encourage the ECB to come to the market’s help.
The euro dropped 0.27% against the dollar to trade at 1.3577. The euro also retreated against the yen, falling by 0.37% to trade at 141.55.
The dollar continued to be range-bound versus the yen, trading down just 0.09% to 104.26.
In US statistics, housing starts for December met expectations but were 9.8% lower month-on-month because of cold weather that slowed down construction. Building permits for the same month slightly missed expectations, dropping 3% from the previous month. Industrial and manufacturing output and capacity utilization for December either met or slightly exceeded expectations, justifying economic optimism for the world’s largest economy.
Traders were expecting University of Michigan preliminary consumer sentiment for January later in the session.
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