- US Retail Sales expected to indicate a 0.4% monthly growth.
- Consumer habits now correlated to growth rather than inflation.
Consumer habits in the US are coming under scrutiny today, but something has changed: the market now correlates them to sentiment and the trade war, instead of inflationary pressures as it did before.
US June Retail Sales will be out today, and forecasts point for a 0.4% monthly growth, while the control group, which has lately become the main readings, is expected also to have advanced 04%.
Inflation these days has become lesser of a concern, as it has been steadily above 2% and the Fed is on its way to raise rates at least two more times this year. However, the escalating trade tensions between the US and China had arisen concerns over the future economic growth. As a sample, last Friday, the July preliminary Michigan Consumer Sentiment Index came in at 97.1, missing expectations of 98.2 and the lowest in six months. So, despite US Treasury Secretary Mnuchin tried to pour some cold water on the matter by stating tariffs are not affecting internal developments, numbers from these months will have the final saying.
The report will likely set the tone for the daily trading, as long as there are no fresh headlines about the trade war indicating an escalation. May numbers were slightly above the expected ones, which means that to actually trigger some dollar's gains, the report has to result well above expected. Soft numbers, on the other hand, will hardly move the bar
EUR/USD technical outlook
The EUR/USD pair is little changed daily basis, some 10 pips above Friday's close and so far unable to clear the 1.1700 figure. The short-term picture is neutral, as it is barely holding above a congestion of moving averages in the 4 hours chart, while technical indicators are stuck around their mid-lines, lacking directional strength. The immediate resistance is 1.1720, the 23.6% retracement of the April/May decline, followed by 1.1755. Gains beyond this last seem unlikely for today. The first support comes at 1.1660, followed by 1.1620. A test of the extremes is more linked to sentiment, rather than the outcome of the report unless it presents huge divergences with the expected numbers.
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