US Monthly Retail Sales Overview
Wednesday's US economic docket highlights the release of monthly retail sales figures for August, scheduled later during the early North American session at 12:30 GMT. Economists expect that the Delta variant prevented many Americans from spending, leading to a decline in sales for the second straight month. Having contracted by 1.1% in July, the headline sales are forecast to fall by 0.8% during the reported month. Excluding autos, core retail sales probably declined by a modest 0.1%.
Meanwhile, analysts at ING offered their view on the upcoming release and explained: “We predict total sales fell 1.5% MoM given the volume of auto sales plunged 11.5%. Even with price increases, this still means that the dollar value of auto sales will be a huge drag given that in July, autos accounted for 19% of all retail sales. Based on the high-frequency numbers we are seeing, we expect a stabilisation in September before a rebound in retail sales gets underway in 4Q, driven by strong employment and wage gains.”
How Could it Affect EUR/USD?
A weaker than expected report will further dampen prospects for an immediate taper announcement by the Fed at the upcoming meeting on September 20-21. This, in turn, could weigh on the US dollar and provide a modest lift to the EUR/USD pair.
That said, investors still believe that the Fed would begin rolling back its pandemic-era stimulus later this year, suggesting that any immediate market reaction is more likely to be short-lived. A stronger report will reaffirm market expectations and trigger a fresh leg up for the USD, paving the way for a further near-term depreciating move for the major.
Meanwhile, Yohay Elam offered a brief technical outlook for the EUR/USD pair: “Euro/dollar is trading in a narrowing wedge or triangle, and technical textbooks signal higher volatility is underway. To what direction? The Relative Strength Index (RSI) on the four-hour chart and momentum are fairly balanced. The currency pair is trading above the 200 Simple Moving Average (SMA) but just below the 50 and 100 SMAs, pointing to a minor advantage for bears.”
Yohay also provided some important technical levels to trade the major: “Support awaits at the round 1.18 level, followed by the September low of 1.1770. Further down, 1.1740 and 1.1725 are eyed. Resistance is at 1.1845, the weekly high, and then by 1.1860, 1.885 and 1.1910.”
Key Notes
• US August Retail Sales Preview: Can gold turn bullish on a weak print?
• US Retail Sales Preview: Forecasts from five major banks, damage from lack of available new cars
• EUR/USD Forecast: Euro looks to break out of wedge, but where? US Retail Sales hold the keys
About US Retail Sales
The Retail Sales released by the US Census Bureau measures the total receipts of retail stores. Monthly per cent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).
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