Partner Center Find a Broker

Looking to trade the news this week? Here’s why the upcoming U.S. retail sales release for December might be worth watching for quick pips!

Here are points you need to know if you’re planning on trading the event:

But first, what the heck is a retail sales report?

Every month, the government sends out surveys to retailers to measure spending in department stores, electronic shops, car dealerships, gas stations, and restaurants.

It doesn’t factor in the service industry, which includes things like air travel, professional medical care, or how much you pay your stylist down the street to fix your afro.

The report features a “core” retail sales figure, which removes volatile items such as automobiles from the mix.

Traders pay attention to the release because consumer spending makes up 70% of the U.S. GDP, one-third of which comes from retail activity. BFD, don’t you think?

What happened in the previous release?

  • Headline retail sales up by 0.2% vs. 0.5% forecast in November
  • Core retail sales posted 0.1% uptick vs. 0.4% consensus
  • October headline retail sales upgraded from 0.3% to 0.4%
  • October core retail sales revised from 0.2% to 0.3%

Consumer spending was weaker than expected in November last year as Americans continued to be tight-fisted with their moolah. This prompted analysts to project weaker overall growth figures for the previous quarter.

Looking closer at the November retail sales numbers reveals that consumers cut back on spending at restaurants and bars, along with purchases at clothing, hobby, musical instrument, and book stores. On the flip side, sales at electronics, furniture, and appliances stores ticked higher.

Overlay of USD Pairs: 15-min Charts
Overlay of USD Pairs: 15-min Charts

The dollar had a mixed reaction to the report as it ended the day lower against the yen then consolidated against the franc, but it was able to hold its ground versus the rest of its peers.

What are traders expecting this time?

  • December headline retail sales to show 0.3% gain
  • December core retail sales to see 0.5% increase

It looks like market watchers are factoring in stronger seasonal spending for December! Both headline and core versions of the retail sales report are projected to show slightly stronger gains than in the previous months.

Take note, however, that the core retail sales figure has been coming in weaker than expected over the past four months, so there could be a strong likelihood of a downside surprise.

If tomorrow’s retail numbers improve significantly more than markets are expecting, then we could see the dollar rally against its counterparts on lower rate cut bets.

Planning on trading the dollar?

A quick look at MarketMilk reveals that the dollar is mostly bearish against its peers, except against the Japanese yen.

Major Pairs Moving Averages from MarketMilk
Major Pairs Moving Averages from MarketMilk

If you’re hoping to catch the biggest moves among the dollar pairs, here’s a look at the average volatility in pips over the past week:

USD Pairs Volatility from MarketMilk
USD Pairs Volatility from MarketMilk

Whichever pair you choose, just don’t forget to practice proper risk management when trading the news. Good luck!