US Retail Sales preview: tepid but constant growth

The US will release this Monday, September Retail Sales,  seen up from the previous month by 0.5%, while the core reading, ex-autos is foreseen up by 0.3%, matching August figure. The Retail Sales Control Group number is forecasted at 0.4% vs. the previous 0.1%. Such figures should help the greenback extend its Friday's recovery, particularly considering that in August, US retail sales increased at their slowest pace in six months.

Ahead of August release, spending and inflation cooled down, and the same happens this time: according to the official release, US inflation rose by less-than-expected amid falling energy prices, up 0.1% in the month and by 2.3% from a year earlier. Excluding the volatile food and energy prices, the CPI edged up 0.1% for the second straight month. Also, Consumer Sentiment as measured by the Michigan University, increased by less-than-expected according to the preliminary estimate for October, printing 99.0, still above 2018 average. These numbers may anticipate another month of unimpressive figures but it is unlikely that could change the view of healthy economic growth, or take the Fed out of its tightening path.

Employment data offers mixed hints, as, despite strong hiring, wage growth is still restrained. Average hourly earnings rose 2.8% YoY in September, following a 2.8% gain in August, well below the level it should be with unemployment at 3.7%. Retail Sales could hardly post impressive gains in a limited wage growth scenario

The greenback heads into the release strengthening particularly against European currencies, these last, hurt by self-woes and risk aversion.