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

Latest Forex Analysis

Editors’ Picks

EUR/USD hits two-month lows amid USD strength

EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.

EUR/USD News

GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

GBP/USD News

Cryptos: Bears take over and draw a bloody moon

Despite appearances, Bitcoin is the asset with the best risk/benefit ratio. The current falls are adjusted to the ranges of the previous rise. Downward momentum expires in the first half of February.

Read more

Gold rebounds above $1560

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Gold News

USD/JPY stuck in range around 109.50 amid China coronavirus concerns

USD/JPY sticks to its range play around the midpoint of the 109 handle amid rising fears of the Chinese coronavirus outbreak globally, upbeat Japanese CPI data and a minor bounce seen in the US dollar across the board. Focus shifts to US PMIs. 

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures