Retail sales figures, released on a
monthly basis by the Census Bureau in the US, have always been an important driver
of US dollar and other currency strength and weakness. They are up there along
with such indicators as the employment rate and GDP growth.
For the past two months, US retail
sales have been out of step with the employment figures, in particular. While
the employment rate is slowly but surely approaching what the authorities define
as full employment, that percentage of the working population that is in a job
coupled with wage levels that start to engender a rise in inflation, this has
not been reflected in the purchasing activity of people in the shopping malls.
If they have more money, they are saving it rather that spending it. As can be
seen above, while the year-on-year change is heading in the right direction, both
December and January were in negative territory.
The recent severe weather might be a
factor. For all these reasons the outcome for February, which will be released
later today, will be closely watched.
Will
retail sales check the dollar surge?
As parity between the US dollar and
the Euro appears on the radar, Forex traders everywhere are wondering when and if
there will be a correction in the steep downward trend of the Euro / dollar
pair. Technically, there are a number of lesser support levels to be breached
before the really significant nice round number of one is reached. However,
each break through support is resulting in a short squeeze, brought on by the hitting
of stop losses below said supports. Good retail sales figures today will
undoubtedly accelerate this tendency, while the opposite outcome just might
bring about some (temporary?) respite.
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