Retail Sales offer much needed support to the Dollar ahead of Fed minutes

General market theme
On Friday the price action revolved mainly around the Dollar as the market participants were focused on the US currency in light of the Retail Sales report. The consumer report was in focus as the Fed made clear in their recent commentary that they’re monitoring the consumer market and actually believe that it’s going to be one of the key drivers of the domestic economy. Thus when the Retail Sales report printed in a bullish manner the result was a rally in the US Dollar that has been under pressure the entire week.

Price action highlights
The Euro came off its 1.1370 highs and declined on the back of the robust Retail Sales figures dropping below the 1.1300 level and actually the decline has seen some momentum as this morning the Single currency is testing the 1.1200 area. Has the outlook of the Euro changed and is the Dollar taking over? It is still too pre-mature to say anything like this but it’s true that investors were eager to get some good news in favor of the buck but for the correction to turn into a reversal we need a lot follow-through.

The Cable was a bit more complex regarding its price action as usual on Friday, the currency traded either side of the 1.4500 level as investors didn’t seem too quick to abandon the UK Pound and bet in favor of the Dollar. However it does seem hard for the Cable to print new highs at this time without fresh stimulus so a decline below the 1.4450 lows could drive the Cable below the 1.4400 area in the coming sessions.

Focus of the day
Today we don’t expect too much in terms of volatility as there’s literally nothing in the economic calendar to spark some friction. The ECB President will be speaking in the EU parliament but we shouldn’t expect much from Draghi today, the focus for the rest of the week will be on the Dollar and the release of the Fed minutes from their last meeting on monetary policy schedule for later in the week.