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US Open Note – US retail sales disappoint with minor impact on greenback



US retail sales dive below expectations

The highlight of the day is the US retail sales, which were flat month-on-month in April, worse than the 1% increase that was expected versus an upwardly revised 10.7% surge in March.

The US dollar index is retreating for the second consecutive day with weak momentum and unable to surpass the 91.00 mark. Dollar/yen is trading soft but above the 109.00 psychological level. The dollar could gain on a rise in US yields, while the slow recovery in the employment market may turn consumption lower.

However, there were some encouraging signs to the infrastructure bill. Republican senators and President Joe Biden had a meeting at the White House to discuss some disagreements.

US stock index futures are signaling a positive open today, on the heels of Thursday’s advance.

ECB released meeting minutes with no impact on euro

The European Central Bank released the minutes from its April meeting today. There were no surprises from the minutes, with euro/dollar remaining stable around the 1.2120 level and European indices keeping their gains as well. The bond purchase program under PEPP will remain within 1.85 trillion euros until March 2022 and in any case until the Governing Council judges the pandemic has come to an end.

Both the Fed and the ECB believe that any spikes in inflation measures will be transitory and could be an outcome of base effects from last year’s low prices, hinting that any monetary tightening this year would be premature.

Prime Minister Boris Johnson and Chief medical officer Whitty will have a press conference later in the day as the Prime Minister has expressed some concerns over virus variants. Pound/dollar is ticking higher, meeting the 1.4100 barrier.

Elsewhere, the yellow precious metal is heading upwards (0.5%) around $1,837/per ounce and oil prices are gaining some ground (1.2%) after the strong sell-off yesterday. The commodity currencies are returning to higher ground versus the greenback.

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