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The February US retail sales data was much stronger than expected, even when taking into account the downward revisions in January. A picture of a broadening recovery is emerging. Looking at the Jan-Feb period combined, the headline rate rose a combined 0.4% although the market had expected a 0.3% increase. But the real strength is excluding autos and gasoline. The market expected a 0.9% increase, but instead it rose 1.4%. Ten of the 13 major categories of goods/services increased, led by electronics (3.7%) and appliances. The core--ex auto, gasoline and building materials--feeds into the GDP estimate and rose 0.9%, up 4.5% at the three month annualized pace. This is off the 5.4% pace in Q4 '09, but is well above the 1.4% pace of Q3.

Combined with Thursday's news of a smaller US trade deficit and Canadian figures, including today's Canadian employment (even discounting the Olympic effect), the strength of the North American economy is evident.

Corrective forces were cut short by the data as the dollar had slipped to the lower end of its recent ranges against the European currencies. The euro was turned back from almost $1.38 and sterling had neared the $1.5200 area. If these levels are not taken out today, it may leave the players looking to again probe their downsides next week.

Disclosure: No positions

Source: Retail Sales Results Hint at Economic Strength