US Retail Sales with a big beat
US Retail Sales for October have smashed expectations. However, interestingly, there has been no real strengthening of the USD as a result.
According to the US Census Bureau, US Retail Sales significantly beat expectation in October, with an unadjusted month on month increase of +1.7% from September. This also means that retail sales were +16.3% higher in October 2021 than compared with a year ago.
These numbers beat the consensus forecasts, with:
- Retail Sales +1.7% (+1.4% exp, +0.8% in September.
- Retail Sales ex autos (adjusted) +1.7% (+1.0% exp, +0.8% last)
What does this mean?
According to Danske Bank, these numbers remain way beyond the long term trend for sales. COVID-19 has certainly changed the spending habits of consumers (more goods bought, but fewer services used). This would suggest that the supply bottlenecks issue (supply unable to satisfy demand) remains a problem and will be an inflationary driver for the coming months.
Initial Market Reaction
It is interesting to see that USD has NOT strengthened on this. It is far too early to say, but could this be a sign of USD exhaustion, at least near term.
When strong US economic data drives a weaker USD, this is something to take notice of. After an initial knee-jerk move lower on EUR/USD, there has been an unwinding move, with the market a little cautious. GBP/USD has even rallied, currently around +20 pips higher. US index futures are all but flat, whilst gold has made a limited move.