- US Retail Sales fell below expectations again, but previous data saw an upward revision. - Jobless Claims were stronger than expected and Produce Price Index data was mostly in line. -EUR/USD rose sharply as USD weakened immediately on the news, but soon reversed gains. August US Advance Retail Sales came in well below expectations, coming in at -0.3%, below the expectation of -0.1%. However, last month’s read of +0.0% was revised up to +0.1%. The weakness continued through U.S. data as Retail Sales Less Autos fell by -0.1%, below the expectation of +0.2%, and Less Autos and Gas fell by -0.1%, compared to the expectation of +0.3%. This is in stark contrast to an economy that has been fueled by consumer spending and optimistic Q3 GDP expectations by the Federal Reserve, as it is the second month in a row in this quarter that retail sales been negative. Before this report, the Atlanta Fed’s GDPNow was predicting 3.3% growth in Q3 and New York Fed’s Nowcast expected 2.8%. The other pertinent US Dollar related release on the morning, the July US Producer Price Index, came in mostly in line with expectations. Core PPI (ex Food and Energy) grew +1.0% from a year earlier, matching expectations. Headline prices were flat at +0.0% (y/y), below the expectation of +0.1%. Today’s reports again serve to raise questions on the strength of the US consumer, who has consistently led the way with positive GDP readings in Q1 and Q2. Personal Consumption Expenditures, roughly 72% of GDP, grew by 4.2% in the second quarter as compared to headline Q2 GDP read of 1.1%. The US consumer is generally considered to be the engine of the US economy, and the weaker Retail Sales data may lead policymakers to question whether that engine is beginning to slow.

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