Retail Sales Increase Again, USD Resumes Upside Momentum
The US Dollar turned quite bearish in the last two months of 2023 as the FED started bringing the talk of rate cuts into the scene and the market ran away with it. However, all major central banks will start cutting interest rates this year, while the US economy is holding better than most developed economies, as today’s retail sales report showed. Now the market is rethinking its position and the USD is making some decent gains.
Today the USD is making further gains as the retail sales control group jumped to +0.8% compared to +0.2% expected, while there was a positive revision to the November number to +0.5% vs +0.4% initially reported. The bond market also got moving, with the 10-year Treasury yields rising above 4.10%. Risk assets such as stock markets and commodity currencies are also lower. We are trying to get long on the USD at the moment, probably opening a buy USD/JPY signal soon. Below is the retail sales report:
December 2023 US Retail Sales Report![US december retail sales]()
- December retail sales increased by 0.6%, surpassing the expected growth of 0.4%.
- November retail sales were reported at +0.3%.
Excluding Autos:
- Retail sales excluding autos (ex-autos) increased by 0.4%, exceeding the expected growth of 0.2%.
- The previous month’s ex-autos growth was +0.2%.
Control Group:
- The control group, which excludes volatile items and is used to calculate GDP, increased by 0.8%, significantly surpassing the expected growth of 0.2%.
- The prior month’s control group growth was revised from +0.4% to +0.5%.
Retail Sales Excluding Gas and Autos:
- Retail sales excluding both gas and autos increased by 0.6%, consistent with the growth of the prior month.
Looking deeper into the report, clothes and automobile sales were good, however, pubs and restaurants were lackluster, which could be a sign of lower sales in the coming months, since people cut down on fun stuff like eating and drinking out first, followed by cutting down on more essential goods and services later.
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