The US economy is set to print the retail sales report for February in today’s New York trading session. Analysts are expecting to see a 0.3% uptick for the headline figure and a 0.2% increase in the core figure, which excludes volatile items from the computation.
These should mark a nice rebound from the weakness in consumer spending seen over the last few months, as the cold weather conditions weighed on business activity and hiring. After all, an unstable jobs market would lead consumers to keep their hands in their pockets instead of spending on goods and services.
In February though, the non-farm payrolls report churned out a stronger than expected figure of 175K versus the estimated 151K while the previous two months enjoyed upward revisions. This could mean that spending also rebounded in the month and that upgrades might be seen along with a higher than expected retail sales reading. Do take note though that extremely cold weather was still present in many US states, which might’ve still weighed on overall spending in the month.
Trading the US Retail Sales Release
Based on recent dollar reactions to economic reports, the currency has been sensitive to fundamentals. This is probably because economic data would have a say in whether the Fed will carry on with its current taper schedule or not, leading strong US data to have a bullish effect on the dollar and weak US data to have a bearish effect.
With that, do take a look at how major pairs would behave prior to the report. Consolidation could be expected hours prior to the release with the potential of a strong break in either direction, depending on the results of the report. For instance, GBP/USD has sold off sharply recently but might bounce off the support around 1.6650 if the US retail sales release comes in very weak. USD/JPY is currently pulling back to an area of interest, which might hold as support if the US retail sales figure comes in strong.
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