A Look Ahead at Retail Sales

In slightly more than 2 hours we are about to find out if the US consumer was eventually back on track in July or not. The data for June disappointed in a major way showing declines across major categories resulting in a headline of -0,3% m/m.

Given such weakness towards the end of the second quarter some rebound seems to be natural and that is expected by the markets: the consensus sees the headline increasing by 0,4% m/m.
However, there are signs that the reading might be actually better. BofA ML that uses credit card data sees a possibility of a +0,7% reading and goods orders in the PMI index looked good.

Given very low oil prices the US consumer should be indeed willing to spend more, although notice that sales is the nominal data so declines in prices hurt the reading. For that reason one needs to pay attention to the core/core reading, eliminating autos and gas (and thus large fluctuations in both volumes and prices) that suffered a 0,2% decline in June but is expected to rebound by 0,4% in July.

The data will be of the upmost importance for the EURUSD that remains in a tight range. A solid reading could eradicate stops that might be located just below 1.11 resulting in a larger downward move.