USD optimism depends strongly on today’s retail sales data - MP

FXStreet (Barcelona) - Alfonso Esparza, Senior Currency Strategist at MarketPulse, explains that sentiment around USD has been greatly affected by US retail sales data, and a soft print today could derail the dollar optimism.

Key Quotes

“While U.S. employment data has been the biggest driver of the economy, even the Fed has diversified its focus on the lookout for indicators to validate if the American economy continues to grow at a sustainable pace. Retail sales have been a thorn in the side of the U.S. recovery.”

“Inconsistent data releases have made it hard to understand U.S. consumers. The lower price of oil that hit energy producers has been a welcome turn of events, as there is more disposable income to be spent. Yet consumers are opting not to spend and appear to be saving instead.”

“While this conservative approach is to be applauded, as irresponsible spending was one of the triggers of the crisis in 2008, the fact remains that this recovery has been dependent on the consumer.”

“A more responsible consumer and a strong dollar will not help the U.S. from avoiding a slowdown which is why the Fed is not hanging all the weight of the interest rate decision on employment growth.”

“U.S. retail sales in January (–0.8%) continued the negative trend started in December of 2014 (–0.9%). The forecast for the retail sales data is to be a positive 0.5% growth in February.”

“The USD has been sensitive to missed expectations of retail sales releases and this one will be no different especially after the strong NFP is making the case for a June rate hike.”

“A below forecast retail sales print could derail the USD optimism in this consumer driven recovery.”