If you’re thinking of trading the news, the U.S. retail sales release could give you a nice opportunity to catch some pips this week. Our trusty economic calendar reveals that this report is due tomorrow at 2:30 pm GMT, so let’s figure out what this report is all about.
Why is it important?
The retail sales report serves as an excellent gauge of consumer spending, which accounts for roughly 70% of overall economic growth. That’s why a lot of traders are keeping close tabs on this report, and why you should watch out for it, too!
What is expected for this release?
For the month of October, headline retail sales is expected to tick up by 0.1%, following the previous month’s 0.4% increase. The core version of the report, which strips out the effect of volatile items, is also projected to show a 0.1% uptick.
This particular release comes at a crucial time for the U.S. economy, as traders try to figure out whether the Fed is ready to taper before the end of the year or not. Although incoming Fed Chairperson Janet Yellen has expressed her preference for keeping stimulus measures in place, some FOMC voting members have been speaking about the need to reduce bond purchases sooner rather than later.
How could the dollar react?
With the taper theme still in the background, the U.S. dollar might react to fundamentals instead of risk sentiment. In other words, a strong retail sales figure might be positive for the Greenback while weak results could trigger a dollar selloff.
Bear in mind though that there are a few U.S. reports scheduled to be released along with the retail sales figures. Among these are the headline and core CPI, as well as the existing home sales. To top it off, the minutes of the latest FOMC meeting are also on deck for tomorrow’s New York trading session.
With that, the U.S. dollar’s reaction to the consumer spending data could either be short-lived or extended, depending on how the other reports turn out. If you plan on trading dollar pairs around these releases, be ready to make the necessary adjustments and practice proper risk management. Good luck!