The below-consensus increase in retail sales tugged the dollar lower against the euro and yen, but the move has been considerably muted given the likelihood for the Federal Open Market Committee to hike U.S. rates later this afternoon. Additionally, a better-than-expected gain in both the nominal and core PPI is also having a dampening effect on selling pressure associated with anemic retail sales.
Ahead of Wednesday’s first round of economic data, the dollar was nearly unchanged against the majors. The European session saw some activity associated with an unexpected drop in the euro following another unsuccessful challenge to 1.0663 resistance. The sell-off pulled EUR/USD as low as 1.0610 before the joint currency began its recovery. A below-consensus EU industrial production had little impact on the euro as the 0.1% contraction was an improvement in a 0.9% drop in production the month prior. After some very choppy action in Europe this morning, EUR/USD kicked off the North American session fractionally higher at 1.0646.