Market Analysis

Traders await market moving United States retail sales numbers

Financial market participants finally get to see U.S retail sales data for the month of May later today, with expectations riding high for an increase in spending after April’s negative retail sales figure. Most analysts are expecting that U.S retail sales increased by 0.6 percent during the month of May, far surpassing the dismal -0.2 number seen in April.

Consumption accounts for roughly seventy percent of the United States economy, further underscoring the importance of today’s report for traders and investors. The retail sales report also takes on extra significance as the Federal Reserve meets next Wednesday to decide on interest rates, where they are expected to pave the way for July rate cut.

The key for higher U.S retail sales has traditionally been a favourable U.S jobs market and an increase in average hourly wage earnings for American workers. Wages have gradually moved higher during the first quarter, while the official United States unemployment rate remains at a fifty-year low. Worryingly, initial weekly jobless claims have been rising and the ADP private sector jobs report fell to its weakest level since May 2010 last month, while the nations manufacturing sector has seen a significant slowdown.

The sharp slowdown in U.S macroeconomic data leaves-the-door-open for disappointment today, especially given that three-out-of the last five U.S monthly retail sales reports have shown negative figures. An important part of the retail sales report for analyst will be the emergence of any bearish trends, with particular importance given to motor vehicles, clothes, appliances, and building material as these areas saw a significant decline in April.
Today we also see the release of the Michigan consumer sentiment report and U.S industrial sales, both these key data points also have the potential to spoil the current fightback in the U.S Dollar Index. The U.S Dollar Index survived a test towards its 200-day moving average last week and managed to attract some decent buying interest; weaker data today may prompt another key test of this important technical metric.


EUR/USD Daily Mountain Chart Source ActivTrader Platform

EUR/USD Daily Mountain Chart | Source: ActivTrader 


The EUR/USD had a strong technical reversal from the 1.1340 level earlier this week, as bulls once again failed to move the pair above its 200-day moving average. Key technical support on an intraday basis is found at the 1.1230 and 1.1200 levels, while major upside resistance is found at the 1.1310 and 1.1365 levels.


Written by Nathan Batchelor, External Analyst, ActivTrades

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