US December Retail Sales Preview: Can dollar capitalize on upbeat data?


  • Retail Sales in the US are forecast to remain unchanged in December.
  • Dollar has been having a difficult time finding demand this week.
  • Market participants will pay close attention to Retail Sales Control Group print.

Retail Sales data for the month of December will be released by the US Census Bureau on Friday, January 14. Investors expect sales to remain unchanged at $639.8 billion in December following a 0.3% increase in November. 

Whilst the market reaction to this data point is usually pretty muted, the Retail Sales Control Group, which represents the total industry sales that are used to prepare the estimates of the Personal Consumption Expenditures (PCE) for most goods, may elicit a response. 

In November, the Retail Sales Control Group contracted by 0.1%; in contrast, it is forecast to rise by 0.1% in December. A stronger-than-expected increase could help the greenback show some resilience against its rivals ahead of the weekend but it is unlikely to trigger a convincing recovery in the US Dollar Index (DXY). On the other hand, a negative print should open the door for an extended DXY decline.

Earlier in the week, the dollar sold off after FOMC Chairman Jerome Powell said they will need up to four policy meetings to come up with a plan to reduce the balance sheet. This contradicted the view held by many policymakers in the minutes of the December policy meeting that it was appropriate to start the balance sheet runoff after the first rate hike.

On Wednesday, the US Bureau of Labor Statistics reported that the annual Consumer Price Index (CPI) rose to 7% in December from 6.8% in November. With this print matching the market consensus, investors seem to be reassessing the odds of the Fed hiking the policy rate four times in 2022. 

To summarize, the dollar is struggling to find demand as this week's developments suggest that the Fed could afford to stay patient when it comes to policy tightening and the Retail Sales report by itself is unlikely to change that.

DXY technical outlook

DXY could fall further before becoming technically oversold, according to the Relative Strength Index (RSI) indicator which is holding above 30 on the daily chart. The index is staying below the six-month-old ascending trendline, confirming the bearish bias. 

A strong support area seems to have formed at 94.60/50 (100-day SMA, former resistance). A daily close below that support could see DXY target 94.00, where the Fibonacci 38.2% retracement of the June-December uptrend is located.

In case the index stages a technical correction, it could meet first resistance at 95.20 (Fibonacci 23.6% retracement, ascending trendline) before returning to 96.00 (50-day SMA, psychological level).

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: Weekly resistance line, 200-SMA test recovery above 1.1300

EUR/USD pauses corrective pullback from two-month-old support around 1.1330 during the initial Asian session on Tuesday. The major currency pair battles the 200-SMA, as well as a descending trend line from January 17.

EUR/USD News

GBP/USD is testing critical hourly support

GBP/USD is holding tight in somewhat bearish territory below 1.35 the figure. Sterling dropped on Monday to its lowest in three weeks versus the US dollar, with traders moving out of risk and into safe havens due to the expectations of Fed tightening and escalating tensions between Russia and Ukraine.

GBP/USD News

Gold struggles around yearly resistance line with eyes on Fed

Gold bounces off intraday low to extend the previous day’s recovery moves towards a one-year-old descending trend line. That said, the yellow metal picks up bids to $1,841 by the press time of Tuesday’s Asian session.

Gold News

Bitcoin finds buyers despite new six-month and 2022 lows, BTC relief rally on deck

Bitcoin price action on Monday was mainly in a full-blown bear attack, with a new 2022 and six-month lows hit. That all changed near the end of the NY equity market session when buyers poured in to rally Bitcoin higher to close in the green for the second day in a row.

Read more

The sell-off continues as Fed, earnings and Ukraine trigger sell off

US stocks are having yet another calamitous start to the week, both the Nasdaq and the S&P 500 are down more than 3% at the time of writing. The question now is, will this sell off last, or have we been wrong-footed by another strange Monday in the land of investing?

Read more

Majors

Cryptocurrencies

Signatures