EUR/USD has rejected the break of 1.3000 after the weak retail sales data. The Fed views a pickup in consumer spending as a pillar of the recovery and the minutes of the FOMC meeting were upbeat on the potential for more gains.
Some key factors that tend to support growth in household spending were positive in recent months. After decreasing in the first quarter when payroll and income taxes increased, households’ real disposable income rose in April, in part reflecting a small decline in consumer prices. Households’ net worth likely increased in recent months, as equity values and home prices rose further.
It’s yet another example of sentiment surveys (like the University of Michigan) pointing to a better mood but cash registers not showing improvement.
