How to Trade the U.S. Retail Sales Release

If you’re thinking of trading the news, the U.S. retail sales release could give you a nice opportunity to catch some pips early this week. Our trusty economic calendar reveals that this report is due in tomorrow’s U.S. trading session, so let’s figure out how to make pips from this economic event.

What is the retail sales report all about?

The retail sales report serves as an excellent gauge of consumer spending, which accounts for roughly 70% of overall economic growth. It is a reliable indicator of spending and growth, as it measures the trend in sales figures of the thousands of retail stores scattered all across the country.

Aside from the headline retail sales figure, a core reading is also released. The main difference between them is that the headline figure includes automobile purchases while the core reading does not.

What is expected for the upcoming release?

For the month of April, the U.S. economy could show a 0.5% uptick in headline retail sales and a 0.6% rise in core retail sales, slightly slower than the gains logged in the previous month. Bear in mind though that employment has been much stronger than projected in April, which increases the odds of seeing better than expected consumer spending data for the same month.

us retail sales

As you can see from the graph above, both core and headline sales have posted positive figures in the past couple of months, suggesting that spending is starting to pick up. However, you should also keep an eye out for any revisions in the past figures.

How does the Greenback usually react?

Over the past few months, the U.S. dollar has been strongly reacting to fundamentals, as signs of improvement in the U.S. economy have been enough to convince most traders that the Fed will carry on with its taper plans. On the other hand, weak economic data tends to spark a quick dollar selloff.

Are you planning to trade the U.S. retail sales release? Don’t be shy to share your game plan in our comment box or cast your votes in our poll below!