Mild Reaction on Canada and UK Improved Retail Sales Data

Mild Reaction on Canada and UK Improved Retail Sales Data

The dollar would probably finish with its worst performance in a week, followed by the yen and the Swiss franc. But it stays in the same range as other major pairs and crosses. Investors are struggling to decide which direction to go, despite vaccine news and a rift between the US Treasury and the Fed. The slow progress of the Brexit negotiations and the infection of the EU delegation with the coronavirus were also ignored. Both the UK and Canada released strong retail sales data today but did not generate many reactions.

Data released on Friday showed that retail sales in Canada rose for the fifth straight month in September, climbing 1.1% above the 0.2% consensus. National Bank of Canada analyst Jocelyn Paquet notes that spending exceeded pre-crisis levels in nine of the 11 retail sub-sectors under review after September profits.

Retail sales in the UK in October grew by 1.2% mom, by 5.8% YoY. Retail sales excluding fuel increased by 1.3% mom, by 7.8% YoY. The last three months have seen slower growth, with October 2020 sales 6.7% higher than before the February lockdown.

Also released was the data on net borrowing of the public sector in October to 21.6 billion pounds sterling. The Gfk consumer confidence index fell to -33 in November. Producer price index in Germany in October amounted to 0.1% m / m, -0.7% y / y.
US Dollar Index and Market Reaction
In the meantime, traders continue to track the progress of the coronavirus pandemic in the US and the rest of the world, optimistic that an effective vaccine will lose some of its recent brilliance at the same time.

The index manages to attract some buyers at the end of the week and after six straight losing sessions. The weekly dollar decline appears to have met some serious resistance in the 92.20 regions, however, this area coincides with the 6-month support line (from 2020 peaks on March 20).

The recent DXY decline came to a halt right ahead of the 92.00 area, where some decent controversy appears to have emerged. Meanwhile, the dollar remains focused on the post-election scenario and the outlook for the US economy under the Biden administration, while monitoring the impact of the second wave of the pandemic on economic recovery.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.