US Retail Sales July Preview: USD to lift as expectations of moderation looks overstated
|Sales recovery is expected to moderate in July from historic gains in May and June. The US Dollar, which has stabilized after falling for three weeks, is likely to receive a boost if sales beat expectations, Joseph Trevisani, an analyst at FXStreet, reports.
Key quotes
“Retail sales are forecast to rise 1.9% in July following the combined 25.7% gain in June (7.5%) and May (18.2%). Purchases in the control group category, which is the Bureau of Economic Analysis’ consumption component, are forecast to rise 0.8% in July after June’s 5.6% and May’s 10.1% increases. Sales excluding automobiles are projected to climb 1.3% in July following gains of 7.3% in June and 12.1% in May.”
“Employment is the most important factor in consumption. If US households are reasonably confident of maintaining their income they have always been reliable consumers. The only caveat to this consumption picture is the drop in consumer sentiment in July. It is possible that, given the actual job and inflation numbers, the decline was more a product of the fear of the second wave cases than a measure of genuine economic impact.”
“The sell-off in the US dollar over the past month was predicated on the second wave Covid-19 impact on the economy. If retail sales do not in fact drop as anticipated, the currency will have another data point for a stronger USD.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.