U.S. Markets Closed, but Retail Sales, Consumer Inflation Disappoint

Trading was light on Friday due to the observance of Good Friday. The major commodity exchanges were closed and bank holidays took place in all of the major countries. There were a few economic reports with the major ones coming from the U.S.

From east to west, Japan issued revised industrial production data. It came in at 3.2%, better than the 2.0% estimate and previous read.

The USD/JPY closed the lightly traded session at 108.606, down 0.485 or -044%.

In China, the M2 Money Supply rose 10.6%, below the estimate and previous read of 11.1%. New loans totaled 1020 billion as expected, slightly above the previous 1170 billion.

U.S. Economic Data

Consumer Inflation

On Friday, the government reported that consumer prices fell in March by the largest amount in more than two years. Traders blamed the drop on another sharp decline in the price of gasoline and other energy products.

According to the U.S. Labor Department, the Consumer Price Index dropped 0.3 percent in March following a tiny 0.1 percent rise in February. It also represented the first monthly decline in 13 months and the biggest drop since prices fell 0.6 percent in January 2015.

The data showed that gasoline prices fell by 6.2 percent. Also falling was the cost of cellphone plans, new and used cars and clothing.

The Labor Department also said that that Core Inflation, which excludes food and energy, declined 0.1 percent last month. Finally, it should be noted that over the past 12 months, inflation is up a moderate 2.4 percent while core prices have risen 2 percent.

Despite the bank holiday, Barclays responded to the report by saying the CPI figure was “much weaker than expected.” Additionally, it also cut its first-quarter GDP estimate to 0.8 percent because of the lower-than-expected number.

Retail Sales

U.S. Retail Sales came in lower for a second straight month in March with the weakness led by softening demand for automobiles. Coupled with the weak CPI data, this could be an early indication that first quarter GDP could come in lower than the previous estimate.

According to the Commerce Department, retail sales dropped 0.2 percent last month. February’s retail sales were revised down to show a 0.3 percent decrease instead of the previously reported 0.1 percent gain.

Traders should also note that February’s drop was the first and biggest in nearly a year.

Economists and traders were predicting a drop in retail sales of 0.1 percent last month. This compares to March 2016 which showed an increase in retail sales of 5.2 percent.