Attention Shifting From Inflation to Economic Strength Globally
For more than a year, the market’s primary attention has been fixated on inflation, after seeing surges in consumer prices that we have never seen before, with most goods jumping between 20% and 300%. The earnings of majormultinational companies have been surging as well, although since a year ago inflation has been slowing. As price pressures begin to ease and inflation approaches the central bank target, the spotlight is anticipated to pivot towards the economic data, which shows the current economic weakness/strength and search for more evident indicators of a potential recession.
One of the most effective barometers for assessing the shape of the US economy is the retail sales report, and this metric will take center stage later today. Following a relatively quiet start to the week on Monday, the focus will shift to retail sales data scheduled in a couple of hours. Subsequently, a sequence of indicators related to housing and manufacturing will follow.
The upcoming US Retail Sales Month-over-Month (M/M) data is projected to show a growth of 0.4% for July, an improvement from the previous reading of 0.2% in June. Meanwhile, the Year-over-Year (Y/Y) figure is anticipated to be 1.5%, slightly higher than the previous reading of 1.49%. It’s worth noting that the Control Group metric, which provides a more reliable representation of consumer spending, holds greater significance. While there is currently no consensus on this metric, it’s important to mention that the previous release exhibited a 0.6% increase.
Anticipated figures from the Commerce Department’s retail sales data suggest a resurgence in consumer demand as the Q3 data gets underway, following the June increase that fell short of expectations. As August progresses and additional data becomes available, investors will gain a more comprehensive insight into the potential stance the FED might adopt during its annual gathering in Jackson Hole, Wyoming, at the end of August. This event is likely to offer valuable insights into the central bank’s outlook and future policy direction.
So, if the numbers are decent, we’re likely to see further bullish momentum in the USD. Risk assets are most at risk of a positive reading, particularly the AUD and the NZD which have been showing increasing weakness, as well as the CAD, but that will also be prone to the CPI inflation numbers from Canada later today. In this case, we will try to buy the USD against commodity dollars, while in the case of a soft reading, we will likely Buy GOLD and sell USD/JPY . These last two assets have been showing increasing weakness as well as the USD gets stronger, but in case of a miss, they will likely benefit the most as safe havens as well.
Gold XAU Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals