Retail sales, CPI, wages, they don’t come much bigger than this for the Fed trade

It’s been a pretty dead week for data, as is usually the case the week after the NFP but we;re going out with a bang with some big data.

Here’s what’s coming up;


Retail sales September 2017

  • 1.7% exp vs -0.2% prior m/m
  • Ex-autos 0.3% vs 0.2% prior m/m
  • Ex-autos & gas 0.4% vs -0.1% prior m/m
  • Control group 0.4% vs -0.2% prior m/m

CPI September 2017

  • 2.3% exp vs 1.9% prior y/y
  • 0.6% exp vs 0.4% prior m/m
  • Core 1.8% exp vs 1.7% prior y/y
  • 0.2% exp vs 0.2% prior m/m
  • Real average weekly earnings -0.3% exp vs -0.6% prior m/m
  • Real average weekly earnings 1.0% prior y/y
  • Real average hourly earnings 0.7% prior y/y

Business inventories August 2017 0.7% exp vs 0.2% prior m/m

Retail inventories final (ex-autos) vs 0.4% prior

14.00 GMT

University of Michigan consumer sentiment flash October 2017

  • Sentiment vs 95.0 exp. Prior 95.1
  • 1yr inflation expectations vs 2.7% prior
  • 5yr vs 2.5% prior

What’s going to happen?

Retails are a volatile number so roll with the punches. Good numbers, USD up, bad USD down, obvious. However, CPI will likely trump sales, depending on the size of any variation. At the moment the hike is baked in for Dec so the big price move risk is a big miss. My rule of thumb is we’ll get a decent move if we’re out either way by 2 percentage points. Anything under 2pp and then retails might be more of a factor. But then we need to factor in the earnings data. Stong dat there could offset a miss in CPI. Again it all depends on the size of any variations.

This could be a difficult one to trade as there are so many permutations to think about when trying to work out the direction for the dollar. The icing on the cake is that a lot of this data could also be skewed by the hurricanes, and that could be a big factor if we think about what we’ve seen from other data points like the PMI’s. In nearly all cases, the Sep PMI’s showed big jumps in the price components, so perhaps our expectations should be set to see higher than expected CPI numbers.

It could get messy so look at your charts and highlight the wider, stronger levels where any moves might run into trouble. For USDJPY, it’s 112.70/80, then 113.00/30 for the upside, and 112.00, 111.80 (though they’re a liitle too close to the action here), 111.60 & 111.45/50 for the downside.


Ryan Littlestone

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