EUR/USD pares daily advances following upbeat US retail sales

The euro trimmed earlier advances against the US dollar, as data showed US retail sales increased more than expected in December, supporting the worlds largest economy at the end of 2013.

Having reached a session high at 1.3699 at 08:45 GMT, EUR/USD pared earlier advances to trade little changed at 1.3672 at 14:30 GMT. Support was likely to be received at January 13th low, 1.3638, while resistance was to be met at January 2nd high, 1.3775.

The Census Bureau, part of the US Department of Commerce, reported that retail sales increased 0.2% in December, higher than analysts expectations of a 0.1% increase. In November, retail sales gained 0.4%, after they have been revised downwards from earlier estimates of 0.7% increase.

Data also showed that core retail sales, or those excluding automobiles, increased 0.7% in December, after they have been downward revised to 0.1% from earlier estimates of 0.4% increase in November. Retail sales are considered as a crucial indicator regarding the trend in consumer spending and overall economic development in the United States. Consumer spending has a key role as it accounts for almost 70% of the US economic growth.

A separate report revealed the import price index remained flat in December, after a decline of 0.9% in the previous month. According to the median analysts forecast, the index should have increased by 0.4%. Year-over-year, the import price index declined 1.3% in December, after it declined 1.9% in the previous month.

Meanwhile, the euro was supported early in the day, after Eurostat reported the industrial production in the euro zone increased 1.8% in November, beating analysts projections for a 1.4% advance. The industrial production recovered from a 0.8% decline in October. Year-over-year, the euro zone production surged by 3 percent in November, which is more than double of the analysts estimates for a 1.4% increase.

Yesterday, a report by Eurostat revealed the Spanish Business Confidence increased to 113.9 in the first quarter from 113 in the last quarter of 2013. The Business Confidence Indicator is based on a survey among managers of 8 000 companies, who are asked to assess the overall performance of their companies during the last quarter, as well as to share their expectations for the current quarter.

A separate report revealed the Italian industrial production slowed its pace in November to 0.3% from 0.5% in the previous month. Analysts had expected the pace of the industrial production will increase to 0.6%. However, the industrial production increased by an annualized rate of 1.4% in November, after it declined by 0.5% in the preceding month.

Elsewhere, having reached a session high at 1.6448 at 09:27 GMT, GBP/USD trimmed daily advances to trade at 1.6399 at 10:23 GMT, adding 0.09% on a daily basis. Support was likely to be received at January 13th low, 1.6347, while resistance was to be encountered at January 13th high, 1.6508.