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EUR/USD Decline as Market Sentiment Turns Sour

January 15, 2021 by

EUR/USD fell today to the new low of 2021. Market analysts explained the decline by the negative market sentiment. Today’s US macroeconomic data added to pessimism as plenty of reports were disappointing, missing expectations. The upside for the dollar was limited, though, after Federal Reserve Chairman Jerome Powell refused to discuss monetary stimulus tapering in his live-streamed interview on Thursday.

Retail sales dropped by 0.7% in December, surprising market participants who were expecting a flat reading. Furthermore, the previous month’s decline got a revision from 0.9% to 1.3%. Core retail sales fell by 1.4% versus expectations of just a 0.1% decline. (Event A on the chart.)

PPI rose by 0.3% in December, accelerating from November’s 0.1% but missing the consensus forecast of a 0.4% increase. Core PPI increased by 0.1%, the same as in the previous month and in line with expectations. (Event A on the chart.)

NY Empire State Index dropped to 3.5 in January from 4.9 in the previous month. That is instead of an increase to 5.7 predicted by experts. (Event A on the chart.)

Both industrial production and capacity utilization increased in December. Industrial production rose by 1.6%, whereas market participants were expecting the same 0.5% rate of increase as in November. Capacity utilization advanced from 73.4% to 74.5%, while analysts had predicted the indicator to stay unchanged. (Event B on the chart.)

Business inventories expanded by 0.5% in November, matching forecasts. The October increase got a revision from 0.7% to 0.8%. (Event C on the chart.)

Michigan Sentiment Index fell to 79.2 in January from 80.7 in December, below the market consensus of 79.5, according to the preliminary estimate. (Event C on the chart.)

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