US retail sales get the ball rolling today and are looking to bounce back from the Dec drop
As we start a busy week for data, January US retails are released today. We saw a sizable drop in Dec from November, with headline sales dropping 1.2%. Taking Nov & Dec together, the numbers weren’t overly encouraging, and we’re going to get the numbers for what can often be another weak sales month.
Sales are expected to come in flat for Jan, with ex-autos rising 0.3%. Core sales are expected to bounce back more strongly at 0.6% vs -1.7% prior.
We all know retails sales is one of the most volatile data points so we could just as easily see sales bounce 1.0% as we could see them fall 1.0%. However, there’s a growing anticipation for today’s numbers and what it might mean for the US economy. The market is still playing catch up with the data so it might be eager to trade it.
I’m not picking a side for the data. As stated, it could bounce, or not but what I am looking for is the market’s reaction. If sales drop again, it;s going to have market commentators questioning the US consumer and thus what that means for the Fed. I fully expect a bad number to be met with a barrage of over the top analysis that the US consumer is dead and that the US is going to hit a recession. If that happens, USD could get sold pretty hard. I won’t be overly worried about a poor number today because it’s part of that broad holiday period. Feb and March will be better indicators about the state of the US consumer. If the number is good, it probably won’t bring a big upside reaction, more so just some relief that it wasn’t bad.
Trading wise, I wouldn’t mind a bad number as I’m long GBPUSD and EURUSD but I’ll roll with whatever the numbers say, and then whatever the market does.
Just a reminder also that the US data is coming to us an hour earlier (in GMT terms) after the US clock change over the weekend.