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Forex Market Shrugs Off Weak Retail Data

Don Curren December 13, 2019

Currency markets shrugged off a moderate disappointment in US retail sales data for November this morning, a result which won’t have any impact on the stand-pat policy stance reaffirmed by the Federal Reserve on Wednesday.

The US Census Bureau reported Friday that retail sales last month totaled $528.0 billion, an increase of 0.2% from the previous month, and up 3.3% from November 2018. Economists expected retail sales to expand by 0.4% last month.

Sales in October were revised upward to 0.4% from the previous estimate of 0.3%.

The data follow a weak performance in initial jobless claims for last week reported on Thursday, and may prompt concern about the potential for disappointment in retail transactions during the critical holiday period. But it’s premature to assume that the season as a whole will disappoint based solely on the preliminary data for November released Friday.

Excluding autos and gasoline, retail sales were unchanged in November. The “control group” advanced by 0.1%.

Clothing sales dipped by 0.6% on a monthly basis, in part reflecting lower prices, the Census Bureau reported, but electronics and appliance stores recorded a 0.7% gain.

Non-store retailers recorded a strong 0.8% gain.

The Fed confirmed on Wednesday that it is comfortable with leaving its range for the federal funds target rate at 1.50% to 1.75% after cutting rates three times as an “insurance policy” against the detrimental effects of trade policy uncertainty on the economy.

The retail data aren’t weak enough, in isolation, to call into question the Fed’s resolve to stand firm on rates on in the coming months.

Don Curren
Market Strategist and Content Editor

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