Date: 11 Mar 2019

The U.S economy releases the much awaited January retail sales report later today, with most investors looking for a strong rebound following December shock decline. The report also takes on extra importance, after Friday’s disappointing Non-farm payrolls job report headline number, which added to fears about the global economy.

U.S retail sales are expected to increase by 0.1 percent in January, following December’s shock 1.2 percent contraction, which marked the steepest decline in retail trade since September 2009. Retail sales excluding automobiles are expected to increase by 0.3 percent after also falling by 1.8 percent during the last month of 2018.

Many investors are also hoping that December’s dismal retail sales headline number will be revised higher, due to December being the most important month of the year for American retailers.  Many companies depend on sales from the Christmas and new year period, as it can vastly affect their annual profits due to a huge amount of consumer spending done during this time.

The U.S Commerce Department has also said that data collection and processing were delayed during the holiday season, adding to overall speculation of a revision higher later today. The world’s largest online company, Amazon, also reported record-breaking sales in the U.S over the holiday season.

A solid rebound in U.S retail sales and a revision to the December number should encourage gains in equity markets after stocks faltered following the weaker than expected U.S monthly jobs headline figure, which showed that just 20,000 new jobs were added to the American economy last month.

The February jobs report showed a mixed picture, which only helped to add to uncertainty about the global economy, with average hourly earnings increasing 0.4 percent, while the U.S unemployment rate ticked down to 3.8 percent, despite the headline figure missing expectation by 160,000 jobs. January’s headline figure was also upwardly revised to 311,000, bettering the 304,000 number that was previously reported.

The greenback held up fairly well on Friday, due to the solid average earnings data and the tick down in the U.S unemployment rate; the U.S Dollar’s reaction to today’s retail sales number will be an important bellwether for the rest of the month and a good gauge for the markets current appetite for greenbacks.

 

USD/CHF Daily Mountain Chart | Source: ActivTrader

USD/CHF Daily Mountain Chart | Source: ActivTrader 

 

The USD/CHF pair is on traders watch list this week as it trading close to the 1.0100 level, if the risk-sensitive pair starts to perform the much awaited breakout, it could ultimately signal further upside in the U.S Dollar Index. A sustained move above the 1.0100 level may trigger a strong surge in the USD/CHF pair towards the 1.0300 to 1.0400 level, while key downside support is located at parity and the 0.9955 level.

 

Written by Nathan Batchelor, External Analyst

 

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