Retail spending in the U.S. increased 1.2% in November to top expectations for a 0.6% rise, while the previous month’s reading was scaled back to reflect an expansion of 1.1% from an initial forecasts for a 1.4% rise. Moreover, sales less autos increased 1.2% after holding flat in October, while retail demands excluding autos and gas expanded 0.6% amid projections for a 0.2% rise.
The breakdown of the report showed discretionary spending on food and beverages jumped 1.0% after holding flat in the previous month, with gasoline receipts surging 6.0% to lead the advance, while demands for building materials increased 1.5% after contracting 1.8% in October. The data encourages an improved outlook for future growth as private sector spending accounts for more than two-thirds the economy however, households may scale back on consumption following the Christmas holiday and ramp up their rate of savings going forward as they continue to face fading demands for employment paired with tightening credit conditions.
Meanwhile, a separate report showed import prices in the U.S. increased 1.7% in November after rising a revised 0.8% in the previous month, with the annualized reading jumping 3.7% from the previous year to mark the first positive reading since October 2008. A deeper look at the report showed the cost of petroleum rose 6.2% during the month to lead the advance, while prices for industrial supplies increased 4.8% after expanding 2.2% in October, and policy makers may turn increasingly hawkish going into the following year as price pressures materialize. However, as Fed Chairman Bernanke expects price growth to remain subdued over the near-term and sees long-term inflation expectations well-anchored, the central bank is anticipated to hold the benchmark interest rate at the record-low throughout the first-half of the following year in order to encourage a sustainable recovery.
As a result, the EUR/USD pared the overnight advance subsequent to the data, and the greenback looks to be regaining its footing following the rise in risk appetite earlier this week, and the greenback may continue to strengthen in the week ahead as growth prospects improve. However, as euro-dollar holds above the 100-Day SMA at 1.4640, the pair may continue to hold a narrow range ahead of the Fed interest rate decision next week as investors weigh the outlook for future policy.
Meanwhile, a separate report showed import prices in the U.S. increased 1.7% in November after rising a revised 0.8% in the previous month, with the annualized reading jumping 3.7% from the previous year to mark the first positive reading since October 2008. A deeper look at the report showed the cost of petroleum rose 6.2% during the month to lead the advance, while prices for industrial supplies increased 4.8% after expanding 2.2% in October, and policy makers may turn increasingly hawkish going into the following year as price pressures materialize. However, as Fed Chairman Bernanke expects price growth to remain subdued over the near-term and sees long-term inflation expectations well-anchored, the central bank is anticipated to hold the benchmark interest rate at the record-low throughout the first-half of the following year in order to encourage a sustainable recovery.
As a result, the EUR/USD pared the overnight advance subsequent to the data, and the greenback looks to be regaining its footing following the rise in risk appetite earlier this week, and the greenback may continue to strengthen in the week ahead as growth prospects improve. However, as euro-dollar holds above the 100-Day SMA at 1.4640, the pair may continue to hold a narrow range ahead of the Fed interest rate decision next week as investors weigh the outlook for future policy.
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