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EUR/USD Dips After Better-than-Expected US Retail Sales

February 17, 2021 by

EUR/USD has been falling on Wednesday and accelerated its decline after the release of better-than-expected US retail sales, though it has been trading sideways afterward. The release of monetary policy meeting minutes by the Federal Open Market Committee did not have any noticeable impact on the currency pair.

Retails sales climbed by 5.3% in January, smashing the consensus forecast of 1.1%, after falling by 1.0% (revised from a 0.7% drop). (Event A on the chart.)

PPI advanced by 1.3% in January. That is compared with the previous month’s gain of 0.3% and the median forecast of 0.4%. (Event A on the chart.)

Industrial production and capacity utilization increased in January. Industrial production rose by 0.9%, exceeding market expectations of a 0.4% increase. The previous month’s gain got a negative revision from 1.6% to 1.3%. Capacity utilization went up from 74.9% to 75.6%, whereas experts were expecting it to stay little changed. (Event B on the chart.)

Business inventories widened by 0.6% in December, while market participants were counting on the same 0.5% rate of expansion as in the preceding month. (Event C on the chart.)

FOMC released minutes of its January meeting. The Committee talked about the significant negative impact the COVID-19 pandemic had on the US economy but was hopeful about the positive influence of vaccination. However, the Committee members thought that risks are skewed to the downside:

The further rise in COVID‑19 cases in the United States, coupled with developments such as the emergence of more-contagious strains of the virus in the United States and elsewhere, led the staff to continue to judge that the risks to the baseline projection were skewed to the downside and that the uncertainty around the forecast was elevated.

The vote to keep the existing monetary policy without change was unanimous. (Event D on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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