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Better Than Expected U.S. Retail Sales Report Drives Dollar Sharply Higher

James Hyerczyk from ForexHound.com at 12/11/09


The U.S. Dollar soared to the upside after the government reported better than expected retail sales in November. The increase was more than twice pre-report estimates. The Greenback received an additional boost after the University of Michigan reported a greater than expected uptick in consumer confidence.

Market participants want to see stability in the labor market and an increase in consumer spending. The bullish response to the retail and consumer confidence numbers is as sign that speculators believe the Fed has enough evidence to hike interest rates sooner than expected.

The EUR USD collapsed to the downside under heavy selling pressure. The downside momentum took this market under the November bottom at 1.4625.

The GBP USD is trading weaker but still holding the low for the week at 1.6166 as well as a .618 retracement level at 1.6154.

The reversal of carry trade positions helped drive the USD JPY sharply higher. This morning’s reaction to the bullish U.S. economic reports triggered a burst to the upside which has this market in a position to test downtrending Gann angle resistance at 90.26.

The USD CHF turned the weekly main trend to up on a trade through 1.0337. The strong move this morning negated yesterday’s potentially bearish closing price reversal top.

Signs of a recovery in the U.S. economy, a mixed stock market and sharply lower gold are all factors contributing to the strength in the USD CAD. Yesterday it was reported that Canada’s trade balance posted a surplus because of higher precious metal prices.

The Aussie Dollar is erasing most of yesterday’s strong gain. The current market is in a position to take out yesterday’s low at .9081. This is likely to accelerate the move to the downside.

The NZD USD is trading inside of yesterday’s range in a somewhat bearish trade. The strong surge the past two days has put this market in a short-term overbought position. The chart indicates a move to .7180 is likely before buyers step up.

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