As the old saying goes: Never underestimate the spending power of the US consumer.
The US dollar is at the highs of the day on most fronts after a strong September retail sales report. Headline sales rose 0.7% compared to 0.3% expected and the closely-watched control group rose 0.6% compared to a flat reading anticipated.
In response, the US dollar rose 20-30 pips across the board. One particular cross in focus is USD/JPY as the pair nears the 150.00 level that triggered intervention from Japanese officials this month.
USDJPY daily
The move in USD/CAD is particularly large as Canada released a soft inflation report at the same time as the US retail sales report.
USDCAD 10 mins
Helping to boost the US dollar are rising Treasury yields. US 10-year rates are up 9.2 bps to 4.80%, which is closing in on the 4.88% cycle high hit last week and the all-important 5.0% level. There is a critical 20-year auction coming up tomorrow that could lead to big swings in bonds and the dollar.
Along with the dollar rise, US equity futures are now in solidly lower territory with S&P 500 futures off by 0.5%.