Eyes on US Retail Sales

12 May, 2017

Eyes on US Retail Sales

Friday May 12th will see the release of a set of crucial US data for April at 13:30 BST; retail sales, retail sales excluding autos, CPI and core CPI. Please be aware that it will likely affect USD and USD crosses along with commodities.

The dollar index has rebounded over the past four trading sessions after hitting a 6-month low of 98.40 on May 5. Gold prices saw a rebound on Thursday, and spot gold has now touched a four-day high of $1229.58 on Friday during early European session.

US retail sales (MoM) saw a downtrend over the past three months mainly caused by the decline in auto and petroleum sales. The consensus for the April figure is an optimistic forecast of 0.6%. However, sales in April for the three automobile tycoons, Ford, Chrysler and GM, saw a further falling of 7.1%, 7% and 5.8% respectively. The declines will likely weigh on the upcoming data. US retail sales outlook seems to be a bit gloomy before auto sales see a recovery.

Retail sales excluding autos (MoM) also saw a downtrend over the past three months with the reading for March, surprisingly, was a zero growth, not seen since August 2016.

US CPI (YoY) has seen a healthy upswing since May 2015; staying above the Fed’s 2% target since December 2016. Core CPI (YoY) has been oscillating steadily in the range between 2.1% – 2.3% since January 2016.

On Thursday, the Bank of England (BoE) announced that; interest rates remain unchanged at 0.25% and the asset purchase programme also remains unchanged at £435 billion which are both in line with market expectations. The BoE sees inflation to be above their 2% target for the next three years due to weak GBP. Consumption will continue to experience a slowdown; however, this will be balanced by rising trade and investment. Wage growth is expected to be quicker in 2018.

The BoE forecasts interest rates are likely to remain at the current level until late 2019. However, monetary policy may need to be tightened more than the markets expect over the next three years. The BoE also predicts the Brexit process to be smooth.

The BoE holds a positive outlook on inflation and economy. However, with regards to monetary policy, it is not very likely for the BoE to undertake a large-scale tightening until the Brexit negotiation deal has a clear outline. In addition, the BoE seems to be overly optimistic about the Brexit negotiation process. The EU is unlikely to make the process easy for the UK, to avoid encouraging other member states leaving following Brexit.

GBP/USD fell from 1.2940 after the UK data was released, holding above the significant support line at 1.2900. This support level was breached following the BoE announcement with GBP/USD hitting a 1-week low of 1.2848.


Source link  
Oil Gains and GBP Stumbles

On Tuesday, the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice...

Geo-Politics will be the focus of the week

This week will be dominated by Geo-Politics as the US Tax Bill needs to be reconciled between the Senate and House, whilst UK Prime Minister...

Positive Economic Data for Euro and UK

Data released on Thursday from Markit Economics showed eurozone’s thriving economy powered ahead in November, with new manufacturing orders...


UK Growth Forecast Lowered

UK Chancellor Phillip Hammond delivered an Autumn Budget that appeared to be somewhat neutral in its content. More sobering was the updated forecast...

Eurozone economy is robust but...

Speaking at the Frankfurt European Banking Congress, ECB President Mario Draghi, commented that although the eurozone economy was robust...

Trump: Jobs, jobs, jobs!

Data released on Friday showed US job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in average earnings and an increase...


UK Interest Rates in Focus

The Bank of England is widely expected to raise UK interest rates for the first time in 10 years today. An expected 0.25% rise, to 0.5%, will push...

Strong US Q3 GDP Boosts USD

The US Commerce Department released Q3 GDP data on Friday, showing the US economy expanded at an annual pace of 3%. With the back-to-back...

So, Who Will Be the Next Fed Chair?

The markets are turning their attention to who will become the next Chairperson of the Federal Reserve. President Trump recently commented that...

  


Share: