US retail sales for January came in significantly weaker than expected, raising concerns about economic momentum as the new year begins. The control group, which feeds directly into GDP calculations, fell -0.8% (vs. +0.3% expected), while the headline figure dropped -0.9% (vs. -0.1% expected). In response, the Atlanta Fed’s GDPNow growth estimate for Q1 was revised down to 2.3% from 2.9%.

Other economic data showed mixed resilience—industrial production rose 0.5% (vs. 0.3% expected), and capacity utilization edged up to 77.8% (vs. 77.7% expected). However, business inventories declined by -0.2% (vs. 0.0% expected), signaling potential weakness in supply chain demand.

The US dollar weakened across the board today following the disappointing retail sales data, with all major currencies closing higher against the greenback. For the day, the New Zealand dollar led the gains with a rise of +1%, followed by the Australian dollar at +0.63%.

Forex

Both the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) expected to announce interest-rate cuts when they meet on Tuesday and Wednesday respectively. The RBA is expected to cut rates by 25 basis points to 4.10% (86% probability), while the RBNZ has a 68% probability of a 50 basis point cut and a 32% chance of a 25 basis point cut from the current 4.25% level.

Despite the cut expectations, the AUDUSD rose 1.41% this week (AUD higher/USD lower). The NZDUSD rose an identical 1.41% for the week.

Looking at the other currencies vs the USD for the week:

  • EURUSD rose 1.62% (lower USD)
  • GBPUSD rose 1.58% (lower USD)
  • USDJPY rose 0.61% (higher USD)
  • USDCHF fell -1.05% (lower USD)
  • USDCAD fell -0.81% (lower USD).

In the US debt yields moved lower in reaction to the weaker data as well:

  • 2 year yield 4.263%, -4.8 basis point
  • 5-year yield 4.331%, -5.5 basis points
  • 10-year yield 4.478%, -4.7 basis points
  • 30-year yield 4.703%, -2.3 basis points

For the week, yields were mixed with the two year down while the thirty-year rose modestly. The debt market did have to maneuver through higher-than-expected CPI and PPI data and a 10 and 30 year coupon auctions which were met with below average demand.

  • 2 year yield, -4.1 basis points
  • 5 year yield, -1.6 basis points
  • 10-year yield, -1.5 basis points
  • 30-year yield, +0.8 basis points

The major US stock indices close with mixed results today. The Dow industrial average is lower, the S&P index was unchanged, and the NASDAQ index was higher. The S&P closed within four points of a record level. For the trading week the NASDAQ index had its best week of the year with a gain of 2.58%. It outpaced the more modest gains in the Dow industrial average and the S&P indices.

  • Dow rose 0.55%
  • S&P rose 1.47%
  • Nasdaq rose 2.58%

Worth mentioning is that Meta shares closed higher for the 20th consecutive day today.

Looking at other markets as the week came to a close:

  • Crude oil fill -0.79% or -1.12% at $70.49. For the week the price fell -0.68%.
  • Silver fell $-0.19 or -0.60% to $32.13. For the week the price rose 1.489%
  • Gold tumbled $45.09 for -1.54% to $2882.21 in trading today. For the week the price rose 0.77%, and traded to a record intraday level of $2942.71
  • Bitcoin (which never closes) rose $900 today to $97,500. For the trading week, the high price reached $98,871 while the low price was at $94,091
Source: Forex Live