Investors bought U.S. dollars after retail sales rose for the third month in a row. The increase in demand was widely anticipated but the increase in overall spending along with spending ex autos beat expectations. This means that while higher prices certainly played a role in the gains, consumers were not discouraged by price hikes to spend more on electronics, sporting goods, books and musical instruments. Spending at clothing stores declined modestly from the previous month but that will change in November and December with holiday shopping. Economists expect a strong holiday season with many retailers starting sales extra early this year in anticipation of shipping delays.
Euro dropped to its weakest level since June 2020 because the European Central Bank is one of the most dovish central banks.
EUR/USD logged its best day in 5 months as US GDP overshadowed the European Central Bank’s monetary policy announcement.