Your Currency Trading Profits

The US dollar is slightly higher today based on retail sales and import prices. Overall retail sales were weak and in line with expectations, declining by.2%.  However, sales excluding autos were above expectations, rising .5%.  So in spite of a worsening employment outlook and very high energy costs, the consumer continues to spend.

Import prices were  higher than expected, rising 1.8% in April.  Imported petroleum prices jumped a further 4.4% in the month and are up 57.2% over the last year.  Over the last 12 months, import prices have risen 15.4%, which is a record high. Non-petroleum import prices again jumped 1.1% in April, matching March’s record one-month increase.  This raised the year-over-year inflation rate on these prices to 6.2% from 5.4%.  
 Imported inflation pressures continue to intensify, led by fuel and foods.  The Fed has to be quite concerned by these trends, particularly since the Fed’s forecast of easing inflation pressures assumes that energy prices come down.  Although the trade-weighted value of the dollar has risen slightly since mid-April , crude oil prices have jumped a further 11%, which suggests additional strong gains in import prices in May. The combination of rising import price pressures and stronger than expected retail sales  further adds to the case for the Fed to remain on hold next month.

I remain flat right now. Good luck and good trading.

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