The US Dollar started to retreat yesterday, despite Tuesday’s strong inflation report and today the decline stretched further. January retail sales showed a decline, which dragged the USD further to the downside, which has now lost all thegains it made after the strong CPI inflation figures on Tuesday.

It seems like the reaction to the CPI data was not as significant as anticipated, despite the initial surge on Tuesday, especially considering the subsequent recovery in equities and the US dollar. The dollar has retreat has escalated after the weak retail sales data and is testing key retracement levels.

Despite the inflaion data, market pricing for interest rate hikes remains around 1% for the year, suggesting that investors may not view the inflation figures as a significant game changer. Overall, the market seems to be absorbing the data and adjusting accordingly, with equities showing resilience in the face of volatile economic indicators.

January 2024 US Retail Sales

• January retail sales -0.8% vs -0.1% expected
• December sales were +0.6%

Details:

• Ex-autos -0.6% versus +0.2% expected.
• Prior ex-autos +0.4%
• Control group -0.4% versus +0.3% expected
• Prior control group +0.8% (revised to +0.6%)
• Retail sales ex gas and autos -0.5% s +0.6% prior

However ahead of today’s numbers, it’s worth noting that retail sales had risen in 7-8 month and coming from soch a strong increase, it’s time for a pause in spending. besides thar, January is ususally a soft month since people spend a lot furing the Black Friday weekend in November and the Christmass period, so they’re out of cash in January and back to work. Despite everything, the resilience of retail sales is impressive, especially considering the decline in petrol costs.

USD/CHF Live Chart