EUR/USD hits fresh session lows as US retail sales outstrip expectations

The euro reached daily lows against the US dollar on Wednesday, after a report showed that retail sales in the United States rose more than projected in October, while core consumer price index came in line with preliminary estimates during the same month.

EUR/USD slipped to a session low at 1.3515 at 13:31 GMT, after which consolidation followed at 1.3532, losing 0.04% for the day. Support was likely to be received at November 19th low, 1.3488, while resistance was to be seen at November 19th high, 1.3578.

According to data by the Department of Commerce, retail sales in the United States rose 0.4% in October compared to a month ago, marking the fastest monthly pace in three months and outperforming expectations of a 0.1% gain, which implied that consumer spending demonstrated resilience even during the 16 days of partial government shutdown. Septembers result has been revised up to a flat performance from a 0.1% dip previously.

Core retail sales, which exclude automobile sales, climbed 0.2% in October, again above the projected 0.1% gain. In September retail sales ex autos increased 0.3%.

These sales figures showed that 9 out of 13 major merchant categories registered increases in October, with the largest gains seen at auto dealers, department stores, clothing outlets and electronics establishments. Sales at automobile dealers advanced 1.3% in October, after the 1.2% decline in September. Industry sales, which are used in the calculation of countrys economic growth, revealed that cars sold at a pace of 15.15 million units in October, down from 15.21 million units in September, data from Ward’s Automotive Group showed. Sales at electronics and appliance stores rose 1.4% in October, or the largest monthly rate since April.

However, some key categories showed weaker results, which suggested that consumer spending remain suppressed ahead of the crucial holiday sales season. Sales in November and December represent between 20% to 40% of US retailers’ annual revenue and 20% of their profit, the National Retail Federation said.

At the same time, the index of consumer prices in the United States dropped 0.1% in October on a monthly basis, due to lower prices of energy, clothing and new cars, following a 0.2% gain in September. Octobers drop was the first since April.

The annualized consumer price index (CPI) slowed down to 1.0% in October, meeting projections and marking the smallest climb since October 2009. The CPI reached 1.2% during the preceding month.

Core consumer price index (CPI), which excludes volatile components such as costs of food and energy, rose 0.1% in October in line with preliminary estimates and matching the rate of increase during September. In annual terms, the core CPI advanced to 1.7% in October, also matching expectations.

However, both the overall and the core CPI remained still below Federal Reserve Banks inflationary objective of 2%, which is considered as providing price stability.

Meanwhile, market players now turned their attention to the minutes of Federal Reserve Bank’s most recent meeting on policy, scheduled for release at 19:00 GMT today.

Elsewhere, the euro was losing ground against the pound, with EUR/GBP cross down 0.31% on a daily basis to trade at 0.8374 at 14:16 GMT. EUR/JPY pair was also on negative territory, down 0.24% to trade at 135.26 at 14:17 GMT.

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