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14 Oct 2015
US retail sales preview: What to expect in EUR/USD?
FXStreet (Mumbai) - The FX markets witnessed broad based USD selling in the European session today, pushing the EUR/USD pair above 1.14 levels ahead of the second most important economic data release in the US – the monthly advance retail sales report.
US domestic consumption is anaemic
Amid the aggregate demand deficiency in the global economy, the Fed would need to see a spike in the domestic consumption/household spending before it hikes rates. So far, neither the household spending nor the corporate spending (durable goods) has showed any spike; making matters worse for the Fed.
Moreover, talk of rate hikes and the resulting strength in the USD index has weighed over the US exports. Consequently, a rise in the domestic spending is much needed for the fed to hike rates.
The estimates call for a rise of 0.2% in advance retail sales in September. The core is also seen rising 0.3%. In case, the numbers miss estimates or fall into the negative territory, the march rate hike probability (currently at 42%) would fall sharply. Poor data would also heighten concerns regarding the global growth slowdown and could trigger another bout of risk aversion. On the other hand, a positive figure could inject fresh lease of life into risk assets.
EUR/USD Technical Levels
For EUR/USD, it is all about how the markets read the actual figure. A negative response is more likely in case the figure prints below estimates/into negative territory. In such case, the EUR/USD pair could extend gains to 1.1460 (Sep 18 high), above which the prices could rise to 1.15-1.1561 (Aug 26 high). On the other hand, a better-than-expected figure could trigger fresh risk-on rally and push the pair lower to 1.1377 (daily low). A break below the same could push the pair down to 1.1318 (trend line support).
US domestic consumption is anaemic
Amid the aggregate demand deficiency in the global economy, the Fed would need to see a spike in the domestic consumption/household spending before it hikes rates. So far, neither the household spending nor the corporate spending (durable goods) has showed any spike; making matters worse for the Fed.
Moreover, talk of rate hikes and the resulting strength in the USD index has weighed over the US exports. Consequently, a rise in the domestic spending is much needed for the fed to hike rates.
The estimates call for a rise of 0.2% in advance retail sales in September. The core is also seen rising 0.3%. In case, the numbers miss estimates or fall into the negative territory, the march rate hike probability (currently at 42%) would fall sharply. Poor data would also heighten concerns regarding the global growth slowdown and could trigger another bout of risk aversion. On the other hand, a positive figure could inject fresh lease of life into risk assets.
EUR/USD Technical Levels
For EUR/USD, it is all about how the markets read the actual figure. A negative response is more likely in case the figure prints below estimates/into negative territory. In such case, the EUR/USD pair could extend gains to 1.1460 (Sep 18 high), above which the prices could rise to 1.15-1.1561 (Aug 26 high). On the other hand, a better-than-expected figure could trigger fresh risk-on rally and push the pair lower to 1.1377 (daily low). A break below the same could push the pair down to 1.1318 (trend line support).