Significant decline of retail sales over the USA in February shocked the market that is together with record data of current account deficit led to the dollar falling on 100 points yesterday during the American session.

The report of Statistical Committee of Department of Retail Trade for February showed sharp decrease of volumes of retail sales practically in all other market segments of the US economy.

The total amount of retail sales showed dip on -1,3 %, and Retail Sales ex-auto showed dip on -0,4 %. This reduction became unexpected for traders as data for January were more than optimistical - according to reports for the last month growth of a sales volume was the peak for last year +2,9 % (the revised data from +2,3 %, and growth of Retail Sales ex-auto +2,6 % (the revised data from +2,2 %).

Retail sales showed negative dynamics of growth in February practically in all branches of economy:

- of durable goods, cars and spare parts – on -4,6 % vs. growth of +4,2in January, of building materials growth made +1,5 % vs. growth of +7,3 % in January, of the furniture decline made -4,0 % vs. growth of +6,5 % in January.

-Of consumables and the perishable commodities:

The common goods growth on +1,1 % vs. growth of +0,2 % in January, Food +1,1 % vs. the January data +0,2 %, the Textile goods-3,3 % vs. growth of +2,4 % in January. Retail sales of petroleum were down -1,6 % vs. growth of sales of +2,4 % in January.

According to the same source on Business Inventories, inventories in February were up 0,4 %, that the Ratio of inventories and sales dipped to a record value of 1.24 in January against 1.25 in December.

The trend of a ratio of business inventories and sales is in a stage of the descending tendency during 10 years. After correction at the beginning of 2005 and consolidation within last 2005, a trend has again returned to the descending tendency.

According to Department of Commerce Current Account for 4 quarter in the USA increased more than was predicted; having reached a record value of $224.9 billion that was spurred by growing deficit of trade balance, which can grow even more this year. Current Account is considered as most total indicator of trade as it includes remittances and the income from investments. For 2005 deficit made $804.9 billion that is a historical record.

Today the whole block of significant news over the USA is expected. The market will watch closely these news, as a matter of fact these data will become a basis for the further building of exchange rates on a monthly prospect.

At the beginning of the American session there are expected Export/Import Prices data of Bureau of Labor Statistics, U.S. Department of Labor.

These data have value as an addition to indicators of Trade balance of Department of Commerce, export-import transactions and have direct influence on building of exchange rates. Data of import prices except for oil and oil-containing products, and the export prices except for agricultural products are considered as the most objective.

Then there are expected FRS data on Net Foreign Purchases for January, these data will be studied in detail by the market. As Net Foreign Purchase is the unique balancing factor for growing double deficiency of the USA. Foreign Purchases pay back the budgetary deficiency and current account and poises a fault in export-import relationship of the USA and the leading industrial countries.

Technical picture.

Eurodollar quotations left a firm currency corridor - balance between the dollar and the euro, limited by levels 1,1950-1,1850, and has been consolidated in area of a level 1,20 - psychological for traders, a level at which the single European currency started in 1998.

Today a special attention should be paid to import and export prices data of Department of Labor in a segment of the USA and EU, it becomes a determinative for building of exchange rates on near-term outlook.

But the resistance zone of 1,2070-1,2100 is significant for a current trend; break out of this level becomes a good application for continuation of uptrend. From these levels there are possible postponed euro Longs with the purposes - 1,2140 the first and 1,2245 - perspective. Stop is not closer than 100 points, accordingly.