- U.S. Retail Sales to Increase 0.3% After Unexpectedly Contracting 0.3% in January 2018. Rebound in Private Consumption to Keep Fed on Track for Three Rate-Hikes in 2018.
- EUR/USD[1] Carves Higher & Lows Following Recent Batch of Lackluster U.S. Data Prints. Monthly Range at Risk as Relative Strength Index (RSI) Threatens Bearish Formation.
Trading the News: U.S. Retail Sales
A 0.3% rise in U.S. Retail Sales may spark a limited reaction as it does little to alter the monetary policy outlook, but a marked rebound in household consumption may curb the recent advance in EUR/USD as it boosts the outlook for growth and inflation.
Signs of growing demand should keep the Federal Open Market Committee[2] (FOMC) on course to further normalize monetary policy in 2018 as ‘members expected that economic conditions would evolve in a manner that would warrant further gradual increases in the federal funds rate,’ and a positive development may generate a bullish reaction in the greenback as it encourages to adopt a more hawkish tone at the next interest rate decision on March 21.
However, another below-forecast print may fuel the recent advance in EUR/USD as it curbs bets for four rate-hikes in 2018, and Chairman Jerome Powell and Co. may continue to project a neutral Fed Funds rate of 2.75% to 3.00% as the central bank struggles to achieve the 2% target for inflation.
IMPACT THAT THE U.S. RETAIL SALES REPORT HAS HAD ON EUR/USD DURING THE PREVIOUS RELEASE
|
Period |
Data Released |
Estimate |
Actual |
Pips Change (1 Hour post event ) |
Pips Change (End of Day post event) |
|
JAN 2018 |
02/14/2018 13:30:00 GMT |
0.2% |
-0.3% |
-29 |
+104 |
January 2018 U.S. Retail Sales
EUR/USD 5-Minute Chart
Household spending unexpectedly slipped 0.3% in January after holding flat during the last month of 2017, while a separate report showed the U.S. Consumer Price Index (CPI) holding steady at an annualized 2.1% during the same period amid forecasts for a 1.9% print. A deeper look at the report showed the weakness was led by a 1.3% decline in demand for motor vehicles/parts, with sales of building materials narrowing 2.4%, while clothing sales increased 1.2% during the same period.
EUR/USD edged lower amid signs of sticky inflation, but the market reaction was short-lived, with the pair pushing back above the 1.2400 handle to close the day at 1.2449. Want more insight? Join DailyFX Currency Analyst David Song LIVE[3] for
