US February retail sales increased by 0.2%, falling short of the anticipated 0.6%. The March Empire manufacturing index dropped to -20.0, while the NAHB housing market index for March was 39 versus an expected 42.
In Canada, February housing starts were reported at 229,000, lower than the anticipated 250,000. The Atlanta Fed’s Q1 GDPNow estimate is now at -2.1%, compared to the previous estimate of -1.6%.
WTI crude oil rose by 31 cents to $67.49, while gold increased by $15 to $2,999. The S&P 500 gained 0.65%, with the NZD leading and JPY lagging.
Us Consumer Strength And Trade Outlook
Despite a lacklustre retail sales report, the control group data provided some optimism regarding US consumer strength. Meanwhile, trade remarks from Kevin Hassett suggested better prospects for Mexico and Canada.
In risk assets, the AUD and NZD benefitted from China’s consumer stimulus. The USD/CAD pair fell by 90 pips, indicating a potential positive shift in tariff discussions.
The yen underperformed as risk appetite grew, while the pound approached 1.30, its highest since November, amidst a general weakening of the US dollar.
These figures point to a mixed outlook. While American retail sales failed to meet expectations, there were still pockets of resilience. The control group data – which strips out certain volatile categories – hinted at underlying consumer stability. That offers some reassurance, even if overall spending remains underwhelming. Meanwhile, manufacturing and housing data painted a weaker picture, which could weigh on broader growth sentiment.
Canada’s housing sector also showed less strength than expected. Fewer housing starts suggest some cooling, which may influence broader investment trends. Meanwhile, revised GDP estimates from the Atlanta Fed indicate deepening concerns about first-quarter growth. A sharper downward revision reinforces worries about momentum slipping, particularly as earlier projections suggested a milder contraction.
In commodities, oil prices edged higher, while gold continued its steady climb. The upward movement in gold reflects ongoing demand for safety, possibly tied to concerns around economic uncertainty. The equity market, however, remained resilient, with the S&P 500 posting gains.
Currency Market Trends And Trade Implications
Currency markets also saw pronounced moves. Commodity-linked currencies performed well, particularly the New Zealand dollar, as optimism surrounding China’s stimulus measures provided fresh support. The Australian dollar followed a similar path, benefiting from improved sentiment around global growth prospects. In contrast, the yen struggled, reflecting reduced demand for defensive positions. A strengthening pound pushed towards 1.30, marking its highest level in months. The retreat in the dollar helped support that rise, pointing to broader weakness in the greenback.
Retail sales data, trade policy speculation, and shifting risk appetite all played into these moves. Remarks from Hassett hinted at more favourable conditions for Mexico and Canada, which may have factored into positioning. The decline in USD/CAD signalled a shift in expectations regarding trade discussions, potentially improving sentiment towards the loonie.
For those navigating options and futures markets, these trends provide a clear backdrop. Currency moves highlight where momentum is building, while shifting expectations on growth and policy could influence positioning. Investors looking at commodity exposure should factor in ongoing strength in gold and changes in oil demand dynamics. An awareness of these evolving pressures remains key when structuring trades.
