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Euro US Dollar (EUR/USD) Exchange Rate Muted despite Rise in US Retail Sales

Euro US Dollar (EUR/USD) Exchange Rate Flat as December’s US Retail Sales Revised Lower

The Euro US Dollar (EUR/USD) exchange rate is muted following US retail sales data, and the pairing is currently trading at an inter-bank rate of $1.1239.

Today, US retail sales rose higher than forecast as January’s control group rose by 1.1%.

Sales were lifted by an increase in purchases of building materials and discretionary spending, marking a rebound after the largest decline in 10 years.

However, the revised data showed that in December there had been a contraction of -2.3% rather than -1.7%.

Core retail sales correspond closely with the consumer spending component of US GDP, which means this could have an impact on the government’s Q4 GDP estimate.

Euro (EUR) Rises despite January’s Unexpected German Industrial Production Contraction

A drop-off in car production drove an unexpected fall in German industrial output in January.

January’s industrial production was forecast to rise by 0.4%, however data showed a contraction of -0.8%.

Following this data release, the Euro US Dollar (EUR/USD) exchange rate fell.

Commenting on the data release, Mizuho Rates Strategist Antione Bouvet said:

‘Industrial production is hard data and it is really cementing the impression that the European economy is slowing down.

‘It is lending credibility to the view that the slowdown is not temporary.’

US Dollar (USD) Slips as Fed’s Powell Says Interest Rates are ‘Appropriate’

On Saturday, Federal Reserve Chair Jerome Powell said that the central bank does ‘not feel any hurry’ to change the level of interest rates.

Instead, the bank is going to watch how the slowing of the global economy affects the conditions in the United States.

During an interview with CBS, Powell said that rates are currently ‘appropriate’.

Powell vouched for the health and safety of the economy and banking system, whilst pointing out that that unemployment is at record lows, saying:

‘The financial crisis did a great deal of damage to many people’s lives. And, of course, not all of them will be made whole, [but] our system is vastly more resilient and strong than it was before the financial crisis.’

Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Slide on a Dovish ECB?

Looking ahead to Tuesday’s session, there will be a speech from the European Central Bank’s (ECB) Sabine Lautenschläger.

If Lautenschläger takes on a dovish tone it could cause the Euro (EUR) to slide against the US Dollar (USD).

The US Consumer Price Index is likely to cause movement in the ‘Greenback’.

If CPI rises by 0.2% as forecast in February compared to the previous month, it could see the US Dollar rise.