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EUR/USD Surges After Record Drop of US Retail Sales, Trims Gains Later

May 15, 2020 by

EUR/USD climbed today following the release of a US retail sales report that showed a record drop. The currency pair trimmed its gains later.

Retail sales collapsed by 16.4% in April on a seasonally adjusted basis. The actual drop was even worse than pessimistic forecasts of a 12.0% plunge. The previous month’s decline got a small positive revision from 8.7% to 8.3%. (Event A on the chart.)

NY Empire State Index jumped to -48.5 in May from -78.2 in April. The actual figure was noticeably better than -65.0 predicted by analysts. (Event A on the chart.)

Industrial production and capacity utilization declined in April. Industrial production slumped by 11.2%, in line with market expectations. It was the biggest drop in history. The March decline got a positive revision from -5.4% to -4.5%. Capacity utilization declined from 73.2% in March to the all-time low of 64.9%. Still, the actual reading was not as bad as 63.9% predicted by experts. (Event B on the chart.)

Michigan Consumer Sentiment rose to 73.7 in May from 71.8 in April according to the preliminary estimate. That is instead of falling to 68.0 as specialists had predicted. The report explained the improving sentiment by the fact that “the CARES relief checks improved consumers’ finances and widespread price discounting boosted their buying attitudes”. (Event C on the chart.)

Business inventories fell by 0.2% in March versus the expected decrease of 0.3%. The February decrease got a revision from 0.4% to 0.5%. (Event C on the chart.)

Net foreign purchases were at -$112.6 billion in March. That is compared with the forecast figure of -$67.4 billion and the February reading of $49.6 billion. (Event D on the chart.)

Yesterday, a couple of reports were released:

Initial jobless claims fell to the seasonally adjusted level of 2,981k last week from the previous week’s upwardly revised level of 3,176k (3,169k before the revision). The actual value was far bigger than 2,500k predicted by experts. (Not shown on the chart.)

Both import and export prices fell in April. Import prices fell by 2.6%. That is compared with a 3.1% drop predicted by analysts and the 2.4% decline registered in March. Export prices fell by 3.3% after declining by 1.7% 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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