Retail Figures Confirm Freefall is Halted

The US Retail Spending has just been posted recording a rise of 1.3% in November beating forecasts of 0.6%. In addition, US Import Prices also increased by 1.7% in November versus an expected 1.2% rise. Consequently, the EURUSD, that had rallied overnight to highs of 1.4775, has now fallen to its present value of 1.4740(see chart).

During the night, ECB President Trichet stated in a speech in London that the freefall of the economy had been halted and turned around. However, more skeptical comments were made by other European spokespersons advising that the financial system remained weak and that the private sector was still vulnerable to new economic shocks in the future.

Elsewhere, the GBPUSD had climbed to 1.6330 during the night before retreating to 1.6290 presently. Earlier this morning, UK Producer Prices posted a rise of 0.2% during November whilst input prices slipped by 0.1%. UK policy makers are expecting price pressure to increase in the short-term as the UK economy attempts to pull itself out of the worse recession since 1945.

There is a further major event risk today when the University of Michigan releases its Consumer Confidence Survey at 10am EST. This figure is expected to climb to 68.8 confirming an improved outlook for US future growth.