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EUR/USD Sinks Despite Awful US Data

April 15, 2020 by

EUR/USD dropped sharply today despite awful US macroeconomic reports. The market sentiment was negative towards risk, and it looks like the dollar managed to profit from its role as a safe currency. As for US data, almost all reports were worse than even pessimistic forecasts, with the exception of business inventories (analysts were on point in this instance) and net foreign purchases (which beat expectations).

Retail sales plunged by 8.7% in March, seasonally adjusted, even more than pessimistic predictions of an 8.0% drop. The indicator logged a mild drop of 0.4% in the preceding month. (Event A on the chart.)

NY Empire State Index plummeted from -21.5 in March to -78.2 in April — the lowest reading in the history of the survey. It was far below the consensus forecast of -35.2. (Event A on the chart.)

Industrial production and capacity utilization sank in March. Industrial production fell 5.4%, exceeding the forecast drop of 4.1%, after rising by 0.5% in the previous month. Capacity utilization dropped from 77.0% to 72.7%, below the level of 73.5% predicted by analysts. (Event B on the chart.)

Business inventories shrank by 0.4% in February, matching the median forecast exactly. The January drop got a revision from 0.1% to 0.3%. (Event C on the chart.)

US crude oil inventories swelled by 19.2 million barrels last week, beating the median forecast of a 12.1 million barrel increase. The stockpiles jumped by 15.2 million barrels the week before. Total motor gasoline inventories increased by 4.9 million barrels. (Event D on the chart.)

Net foreign purchases were at $49.4 billion in February. That is compared with the median forecast of $24.6 billion and the January figure of $21.8 billion. (Event E on the chart.)

Yesterday, a report on import and export prices was released. Import prices dropped by 2.3% in March following the 0.7% decline in February. Export prices fell by 1.6% after dropping 1.1% in the previous month. (Not shown on the chart.)

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

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