Key US retail sales data due at 1:30 pm GMT
US retail sales report for January will be released today at 1:30 pm GMT and this piece of data may be key for future Fed decisions. It is expected that retail sales in the United States increased by 2.0% MoM in the first month of 2023. If those expectations are met, it would be the first increase since October 2022. Interestingly, retail sales declined even as wage growth data kept showing positive values on a month-over-month basis.
Nevertheless, January was another month of strong jobs growth and favourable weather conditions led to increased activity of consumers. Data on car sales suggests that retail sales data for January should come in strong. On the other hand, data on implied fuel demand was mixed but, given seasonal patterns, it should not have a big impact on the overall retail sales reading. Core retail sales according to a Bloomberg survey are expected to increase 0.9% MoM.
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Retail sales data for January may come in hot, on the back of strong labour market as well as favourable weather conditions. Source: Bloomberg
What will strong growth in retail sales mean? Retail sales were dropping in the previous two months, giving Fed some leeway to be less hawkish. Nevertheless, the latest upside surprise in inflation data suggest that Fed may have to stay on hawkish path. Market is currently pricing in Fed peak rate above 5.25%, what should support USD and be negative for equities.
US100
US100 trades close to the upward trendline and attempts to resume upward move. Key demand zone can be found in the 12,100-12,200 pts area. If retail sales data surprises to the upside, US100 may attempt to break below the aforementioned trendline. A clear break below and daily close below the trendline may see the index move towards the aforementioned demand zone. Disappointment in data may trigger drop in yields, what may allow US100 to test 12,800 pts area. Source: xStation5
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