Dollar Strengthens on US Retail Sales & PPI Data
13 December 2007
The US Dollar advanced against both Sterling and Euro this afternoon after the release of stronger consumer spending data and a pick-up in wholesale inflation. US retail sales came in much stronger than expected at +1.2% m/m from an October figure of +0.2% m/m. The increase was partly fuelled by mounting energy prices, with gasoline sales spurting 6.8% higher in November, equating to the largest monthly gain since September 2005.
US producer prices for November surged to a 34 year high of 3.2%m/m from 0.1%m/m in October. Equally, the rise was largely based on inflated oil and food prices as the figure excluding energy and food came in at 0.4% m/m, while core PPI rose 0.1% m/m.
The stronger than expected figures provide a contrasting view to recent speculation that a US recession is inevitable. The knock on effect being, that after the Federal Reserve rate cut earlier in the week, they are less likely to continue aggressively cutting interest rates into 2008.