With the US economy in the tenth year of a record long expansion and unemployment at half-century low, most traders assumed 2019’s critical holiday shopping season would mark another record…and based on the initial estimates and survey-based measures of spending, it may well have done so.

That said, there are still some reasons for caution ahead of the release of tomorrow’s December retail sales report. For one, the Thanksgiving holiday fell far later in the year than usual, condensing the typical holiday shopping season from five weeks to just four.

Then, there was this morning’s earnings report from big box retailer Target (TGT). The company reported that same store sales rose just 1.4% y/y in the key November-December period, well below analyst estimates of a 3.8% rise. Sales of generally popular electronics (-6% y/y) and toys (+0%) were cited as specific areas of weakness, driving the stock down -7% as of writing:

Chart

Source: TradingView, GAIN Capital. Please note this product may not be available to trade in all regions.

Of course, investors fear that Target’s disappointing quarter is just the proverbial “canary in the coal mine” for broader holiday retail sales, so it’s no surprise that rival Wal-Mart (WMT) is trading off by -1% and the overall retail sector (XRT) is also ticking lower, despite a general rise in the broader indices today.

Regardless of which market you trade, tomorrow’s US retail sales report will be critical. Economists are looking for a 0.3% m/m increase, with ex-auto retail sales expected to rise at a more robust 0.5% m/m. That said, if Target’s miss this morning is any indication, there could be potential for a below-expectation reading, which could drive the retail sector, the broader stock market, and even the US dollar lower in tomorrow’s US session.

This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD loses 1.1800 amid escalaing US-Sino tensions

EUR/USD dips sub-18 after the US reported an increase of 1.763 million jobs in July, better than estimated but pointing to a deceleration. Escalating Sino-American tensions are boosting the dollar and fiscal talks are eyed. 

EUR/USD News

GBP/USD resumes decline, weighed by UK concerns, US-China conflict

GBP/USD trades at fresh weekly lows below 1.3050 as the dollar got a sudden boost from mounting tensions between the world's two largest economies. UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever.

GBP/USD News

XAU/USD drops $50 from record highs to the $2020 area

Gold prices are falling sharply on Friday, trading below $2040/oz at the moment. Earlier on Friday, the yellow metal reached at $2075, a new record high.

Gold News

Bitcoin may extend the recovery once Gold resumes the rally

Gold retreated from the recent highs, but the sentiments are still bullish. Cryptocurrencies resumed the upside, some altcoins are demonstrating strong gains. ETH/BTC stopped the downside correction and settled at $0.03300.

Read more

WTI drops 1% to $41.50 ahead of US NFP, rigs data

WTI (futures on Nymex) is on a steady decline so far this Friday, undermined by reduced demand for higher-yielding assets amid the renewed US-China tensions induced risk-aversion.

Oil News

Forex Majors

Cryptocurrencies

Signatures