After a two-day hiatus, USD bulls are back with a vengeance. The Greenback is putting together a solid day on the forex. Gains against the Euro, Australian dollar, Japanese yen and British pound have highlighted the session. All in all, the intermediate-term strength of the USD has resumed.

Retail Sales Are In

The pre-U.S. session hours have brought several important economic events. My colleagues Arslan and Skerdian have covered the releases out of the Eurozone and U.K. in depth. If you haven’t checked out their analysis, be sure to do so.

U.S. Retail Sales for April have been the most recent market mover to hit the newswires. Here is the hard data:

Event                                                   Actual                  Projected         Previous

NY Empire State Index (May)               20.1                           15.0                      15.8

Retail Sales (MoM, April)                       0.3%                         0.3%                    0.8%

Retail Sales ex Autos (MoM, April)       0.3%                         0.5%                     0.4%

What Do The Numbers Mean?

From a practical standpoint, it looks like the consensus opinion has nailed the Retail Sales metric. The metric reflects previous estimates, with only a minor variance being reported in the Retail Sales ex Autos (MoM, April) number.

Although a secondary metric, the New York Empire State Manufacturing Index for May has come in very strong. Beating estimates by 5.1 points, business appears to be booming in New York.

This number is fairly important due to the fact it is calculated by the Reserve Bank of New York (RBNY). Being derived by a FED affiliate, the RBNY statistic has gained the attention of investors looking for insights on coming monetary policy moves. Today’s robust performance is certainly not hurting the Greenback.

CME FEDWatch Index

Here are the updated odds for 25 bps rate hikes in coming months:

Month                              Percentage Chance of 25 BPS Rate Hike

June                                                                 95%

September                                                      73%

December                                                       42%

Traders are showing a split opinion on the chances of a December rate hike, the fourth for 2018. The deciding factor will be U.S. economic performance over the Summer months. If growth and inflation continue on the FED’s projected path, then the 42% chance of a December rate hike is very likely to increase.