US Retail Sales Preview: A tie-breaker after the Fed, but not for EUR/USD

The United States releases the Retail Sales report on Thursday, June 14th, at 12:30. The US economy is based on consumption. Thus this publication is always a top-tier one. The report for May feeds into Q2 GDP, which carries high expectations after a relatively slow start to the year. The release will help determine if strong growth is here indeed. 

Expectations for the headline stand at an increase of 0.4% in May after 0.3% in April. Retail sales excluding autos are for a faster pace of growth: 0.5% against 0.3% beforehand. 

The most important figure is the Control Group, also known as the "core of the core." Here, expectations stand on a growth rate of the same as in April: 0.4%, which was the expected figure last time. This makes the reaction to the data quite straightforward: above 0.4% would be USD positive and below this scale would be USD negative.

If once again, the Retail Sales Control Group comes out as expected, the other figures will have an impact. Any revisions, which are quite common in these publications, could also make a difference especially if the numbers come out as expected. 

Timing is everything

Fed: The decision by the Fed comes out fewer than 24 hours after the all-important Fed decision which consists of new forecasts and also a press conference. Given the importance of the FOMC meeting, markets will continue reacting to the event hours and days afterward. 

If the tone of the central bank is clear, or, equally, if the market has a clear narrative about what happened, the Retail Sales report could be ignored. However, if the statement, dot-plot, and messages from Powell are well-balanced, the publication could determine the next moves for the greenback. In such a case of full balance, the reaction to the data could be more robust, letting the pent-up tension explode. 

ECB: There is one currency that is highly unlikely to react to the report: the Euro. The European Central Bank announces its decision 45 minutes before the publication. More importantly, ECB President Mario Draghi begins his press conference at 12:30, just as the data comes out. Trading the Retail Sales against the Yen would be a better choice. 

Conclusion

The Retail Sales report is a top-tier event that is set to move the US Dollar. The most critical component is the Control Group, and the effect will likely be greater if the Fed decision is balanced. The EUR/USD will not be the best pair to trade on the event due to the parallel press conference by ECB President Draghi. 

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