U.S Retail Sales were shown to have unexpectedly dropped last month by the biggest margin in 9 months. This indicates that consumer spending slumped in the final part of the first quarter of the year.
According to the figures released by the department of commerce today, retail sales were 0.4 percent lower in March. This is significantly lower than the forecasts most experts were making of a 0.1 percent drop, and lower than the figures released last month showing a 0.1 percent gain in February.
The disappointing data has called the U.S’s nascent recovery from recession to be called into question as economists begin to revise down their forecasts as to consumer spending going forward for the quarter. This quarter was in fact slated to be the best as far as consumer spending is concerned in two years. In order for the economy to stay on track with these optimistic forecasts not only will consumer spending need to jump back up, but also there will have to be some improvement in employment and a general rise in wages, especially with ongoing cuts in the federal budget and a hike in payroll tax imminent.
Nevertheless analysts remain optimistic, explaining that the few disappointing economic indicators that have been released in the U.S of late are not evidence that the economy is slipping, but rather that this year saw a relatively strong start on most fronts and that strong start is showing some evidence. They are quick to remind naysayers that the first quarter of the year is still looking significantly better than was being forecast several months back.
The Standard & Poor’s 500 Index slipped by 0.5 percent to 1,586.03 at off the back of this news, withdrawing slightly from the record numbers it had shown on the previous day. In addition to this yields on the benchmark 10-year note also dropped down from 1.79 percent to 1.72 percent from 1.79 percent. Binary PUT trades on U.S indices paid off within the first hour of the data release. EUR/USD was an altogether more complicated affair. Not much took place in the wake of the release; it seemed for a while that the markets were reluctant to be overly bearish regarding the U.S’s lacklustre retail sales results, nevertheless several hours later a run was initiated on the euro, causing it to fall from 1.3149 to 1.30792 in under ten minutes. Well positioned binary traders would have been able to capitalise on both this downward turn and the correlated upward turn in gold as that particular market bounced back from the lows it had reached earlier in the day. The EUR/USD trade was a sure winner though, especially for more aggressive traders who will have kept piling on the 60 second PUT trades which would have closed in the money time and time again. All in all an interesting trading day.