U.S. Retail Sales Jump 1.2 Percent in October, Empire Manufacturing Enters Negative Territory

U.S. Retail Sales Jump 1.2 Percent in October

, Empire Manufacturing Enters Negative Territory

Advanced retail sales in the world's largest economy rose 1.2 percent in October after climbing 0.7 percent the month prior amid expectations of 0.7 percent. At the same time, empire manufacturing in November entered negative territory for the first time since July 2009. Subsequent to the reports, the U.S. dollar lost ground against most of its major counterparts.

The rise in retail sales were led by climbing auto sales. Outside of autos, non-store retailers gained 0.8 percent, while electronics and appliances pared the increase as figures slid 0.7 percent. The report is of great importance due to the fact that stronger retail sales show stronger consumer demand and economic growth. However, despite the upbeat report, the slump in empire manufacturing lead the buck to pare some of its overnight advances as the report entered negative territory for the first time since July 2009. Taking a look at the breakdown of the release, prices paid slid to 22.08 in November from 30.00 the month prior, while the number of employees slid to the lowest level since July of this year. At the same time, new orders and shipments fell at an alarming rate. The report does not bode well for the U.S. economy as it suggests that the industry that once lead the region out of the recession is now tapering off.

GBPUSD Daily Chart

Source: Intellicharts Prepared by Michael Wright

Taking a look at the currency markets, the GBPUSD has halted its three day advance, but has pared most of its intraday losses ahead of the U.K. consumer prices report. It is worth noting that the MACD continues to point to further gains, while downside risks are capped by the 20-day moving average. At the same time, the bullish trend dating back to May of this year remains intact, thus, I do not rule out a test towards 1.6200 in the near term. All in all, I will remain long this pair ad my bias remains to the upside.

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