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Analysts at RBS point out that US retail sales grew by 0.4% in April, after an upwardly revised 0.5% in March and February was also revised up.

Key Quotes

“It seems the US consumer didn’t have quite the soft patch in Q1 as previously thought. And nor should it. Job growth remains robust and wages, while nothing to write home about, are rising faster than inflation. Take home pay is also being boosted by tax cuts. The US consumer has enough reasons to be cheerful.”

“The dollar has risen sharply over the past month, sparking fears, as it often does when the dollar is on the march, of trouble for emerging markets. Why so?   First and most obvious is a stronger dollar raises the cost of servicing dollar denominated debt, which emerging markets often hold. Second, emerging markets often attempt to limit the depreciation of their currency by intervening through spending their external reserves. In other words, they deplete their biggest external asset. Investors can quickly take fright. In the past, dollar strengthening has been the prelude to full-blown crises.”