UK Retail Sales Drop in December as EU Inflation Data Awaits

Written by

Anthony Bull

Daily Currency Update

UK Retail Sales Drop in December as EU Inflation Data Awaits

Today’s data is packed with news from the UK and EU, alongside US housing figures. The spotlight is on UK retail sales for December, which have disappointed with weaker-than-expected results coming in at 0.3% missing forecasts of 0.4%. Meanwhile, European inflation data and speeches from central bank leaders provide focus.

Market Comment

Key Data Out Today

  • UK Retail Sales (MoM, Dec): Decreased by 0.3%, missing forecasts of a 0.4% gain.
  • UK Retail Sales ex-Fuel (YoY, Dec): Increased by 2.9%, rebounding slightly but still below expectations.
  • EU Harmonized Index of Consumer Prices (MoM, Dec): Awaited data will offer more clarity on EU inflation trends.
  • US Building Permits (Dec): Expected at 1.46M; prior was 1.493M.
  • US Housing Starts (MoM, Dec): Forecast at 1.32M, slightly higher than the previous 1.289M.
  • US Industrial Production (MoM, Dec): Expected to remain flat at 0.3%.

Commodities

  • Crude Oil: Brent crude rose 0.71%, trading at $81.86 per barrel, driven by supply optimism and demand strength. WTI is at $79.37, up 0.88%.
  • Natural Gas: Prices slipped 2.79%, trading at $4.13/MMBtu, reflecting milder weather forecasts.
  • Gold and Silver: Gold is steady at $2,712.60, while silver dipped slightly to $30.63.

Currency Movements

EUR/USD

  • EUR/USD: Stable at 1.0297, with traders awaiting inflation data from the EU. Modest support at 1.0285.

GBP/USD

  • GBP/USD: Dips 0.38% to 1.2195, reflecting disappointing retail sales figures.

AUD/USD

  • AUD/USD: Flat at 0.6212, supported by strong Australian employment data earlier this week.

NZD/USD

  • NZD/USD: Down 0.23% to 0.5601, pressured by mixed global risk sentiment.

USD/JPY

  • USD/JPY: Rises 0.32% to 155.66, benefiting from higher US bond yields.

USD/CNY

  • USD/CNY: Remains steady at 7.346, showing subdued movement as Chinese markets stabilize.

USD/CHF

  • USD/CHF: Slightly weaker at 0.9106, reflecting soft dollar momentum.

USD/CAD

  • USD/CAD: Marginally higher at 1.4408, with oil prices offering partial support to the CAD.

USD/MXN

  • USD/MXN: Rises 0.34% to 20.91, weighed down by rising inflationary concerns.

USD/INR

  • USD/INR: Inches up 0.03% to 86.61, mirroring global dollar strength.

Market Outlook

  1. UK retail sales underperformance hints at economic softness as consumers tighten spending amidst persistent inflation.
  2. EU inflation data will likely confirm ongoing challenges for the ECB as core inflation remains sticky.
  3. US housing data and industrial production figures will guide market sentiment later today.
  4. Commodities remain volatile, with crude oil prices staying elevated amid demand optimism, while natural gas retraces on warmer weather forecasts.

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