Forex Market Restrained as US Retail Sales Smash Predictions

• Stronger USD Holds Back Pound
• Euro Also Restricted As Data Exceeds Expectations
• Markets Look to Continue Winning Run

Both the Euro and Sterling remain under increased pressure today as the forex market weighs up a number of factors with US retail sales data coming in much stronger than expected today. This data show a positive return by consumers though the Dollar has been picking up strength as treasury yields increase and concerns about increased inflation come to the fore.

Pound Can’t Break Key Mark as USD Strengthens

The GBP has surged to post-Brexit high points in recent weeks. This is thanks in part to a well-managed COVID-19 vaccination rollout and a nation that seems to be getting a handle on new cases with a mandatory hotel lockdown now in place for many new arrivals. It has been held back from crossing a significant milestone so far today though. The Pound has retreated slightly with the $1.40 point in clear sight.

This is a psychological barrier perhaps for those forex trading the Pound but is also due to the fact the Greenback has been gaining strength on concerns that inflation could become a problem in the not too distant future. With a huge amount of fiscal money being pumped into the economy, and more to come by the end of the month, there are growing concerns that reflation will become an issue.

Euro Remains Weak on US Sales Figures

Improved US Dollar strength has brought further pressure on the Euro which still sits below the $1.21 mark. Even though German sentiment indicators and the general feeling in the region are slowly returning on the positive side, renewed strength from the Dollar which hasn’t been matched has kept the common currency under pressure.

Eyes from many in the bloc are on the release of retail sales data to see how the US economy is bouncing back as most analysts expect with positive figure predictions being easily beaten. This   could at least be a short-term bounce for the Euro while it continues to recover its own strength domestically. At the same time, the risk which is strengthening the Dollar at the moment is a concern of reflation. This has not been solved even with the above expectations data.

Wall Street Looks to Continue Strong Run

While the key driver for forex brokers and those trading today is undoubtedly the retail sales figures, Wall Street is also taking in the huge numbers beat just released. Despite the data showing that consumers spent big in January, the futures market is pointed downward.

US retail sales data came in at 5.3% and well ahead of the 1.2% analysts had expected, yet the market, which has been on a winning run. Such a strong beat on the number is certain to push forth the concern that inflation could be an issue with treasury yields and bonds both moving higher as many traders continue to wonder if the market still has room to run.