Worse-than-expected retail sales data released Wednesday morning continued the dollar’s slide from Tuesday when the greenback fell on the news of President Trump replacing Secretary of State Rex Tillerson. USD is attempting a recovery mid-morning Wednesday.
February retail sales disappoint
Retail sales for the month of February dropped 0.1%, compared to a gain of 0.3% expected and marking the third month in a row of declines.
This is the first time since April 2012 retail sales have dropped three straight months. January data, which was initially reported as dropping 0.3%, was revised to show a 0.1% drop. February retail sales excluding autos grew 0.2% month over month and the control group rose 0.1%, compared to estimates of 0.4% for both.
The EUR/USD spiked to 1.238 on the news. The euro was trading gown against the dollar before the data came out. Comments by European Central Bank President Mario Draghi stating the euro’s recent gains were due more to external factors than to euro-area economic growth had the pair trading lower. The pair is hovering around 1.236.
Before the retail data, the dollar was slipping against the Japanese yen on Tillerson’s ousting. Despite the positive revision to the January data, the pair reached the lower end of the 106 range after the data release and is hovering around the 106 midpoint.
U.K. expels Russian diplomats over poisoning
Cable made a move toward the 1.40 mark this morning on weaker U.S. retail sales data and recent hopeful Brexit comments. However, a U.K.-Russia spy saga is now weighing on the pound, with the pair trading around 1.395.
Germany’s Brexit Coordinator Peter Ptassek said on Twitter that the negotiations between Britain and the European Union are accelerating and “a lot of progress being made.”
However, backlash this morning by the U.K. against Russia for a suspected nerve-agent poisoning of a former spy is holding the pair below the 1.40 mark.
The U.K. will expel 23 Russian diplomats and impose new sanctions, Prime Minister Theresa May said on Wednesday. The U.K. will also not send any ministers to the World Cup in Russia this summer. The measures are in response to an attempted murder of Sergei Skripal and his daughter with military-grade nerve agent novichok last week in Salisbury.
Sunny Chinese data tries to shine through tariff clouds
China released better-than-expected economic data last night, with January industrial production rising 7.2% year over year, compared to the 6.1% estimate. Fixed-asset investment also jumped 7.9% year over year.
Retail sales for January increased 9.7% year over year, just missing expectations of 9.8%.
However, concerns over the Chinese tech sector being the next target of tariffs by the United States is weighing on the yuan. President Trump is reportedly seeking to impose tariffs on more than $60 billion Chinese imports from the technology and telecommunications sectors.