The dollar slid against the euro after a report showed an unexpected decline in US retail sales, raising concern on the nation¡¯s economic outlook. The euro rose back to above 1.35 area versus the dollar with a resistance at 1.3560. The sterling climbed from 1.9780 to as high as 1.9841.
US retail sales fell 0.2% in April, compared to a consensus forecast for a 0.4% rise and 0.8% a month earlier. Excluding autos, core retail sales was unchanged, also below the estimate. PPI, an inflation gauge, rose 0.7% in April, beating the estimate of 0.6% but below previous month¡¯s1.0%. Core PPI was unchanged for a second month.
The worse than expected Retail Sales number has the market reposition itself for the possibility of a Fed ease in the coming months.
EURUSD will face interim resistance at 1.3540, followed by 1.3560 and 1.3580. Additional ceilings will emerge at 1.36, backed by 1.3620. Support starts at 1.35, backed by 1.3470, 1.3450 and 1.34. Subsequent floors are eyed at 1.3360.
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