USD Hiccup, But Hardly a Headache

A soft retail sales report led to a momentary US dollar drop but it once again proved resilient in a sign of the underlying strength. The Australian dollar was the top performer on the day while sterling lagged. The Asia-Pacific week ends on a relatively quiet note with only revisions to industrial production on the calendar. Last night's post-RBNZ Premium short in GBPNZD is more than 200 pips in the money. EURUSD hit its 1.0500 target for 200 pips. AUDNZD and EURAUD remain more than 100 pips in the money. All these trades are in the Premium Insights.

US retail sales fell 0.2% in February excluding autos and gas, compared to a +0.3% rise expected. The prior report was also revised down to -0.1% from +0.2%. The internals of the report were also soft but US dollar bulls were hardly dissuaded.

A 30-pip dip in USD/JPY was reversed in minutes and the pair the rallied another 30 pips to 121.34 and a nearly-flat close on the day. The rebound was given a helping hand by a 25 point rally in the S&P 500 that took the edge of the recent declines.

Even the beaten-down euro couldn't hold onto retail sales-driven gains. A rally to 1.0675 was quickly sold back down to 1.0600. It rose three-quarters of a cent on the day but that's hardly impressive given the magnitude of the recent losses.

The main theme was a paring of USD strength but a secondary story was the weakness in cable. Carney told a regional paper he's in no rush to hike rates and that accelerated a slide. GBP/USD fell as low as 1.4851. The major level to watch is the 2013 low of 1.4814.

Up next it's the final reading Japanese IP at 0430 GMT. The initial reading was +4.0% m/m.