US Retail Sales Next

On the back of yesterday’s Empire State Manufacturing reading, focus today shifts to the latest US Retail Sales data. Following the negative readings seen over the prior month, the market is expecting a firm rebound in today’s data, reflected increased consumer activity amidst the decline in inflation recently. On the numbers front, analysts are forecasting headline retail sales to have risen 0.8% on the month, up from -1% the prior month while core retail sales are forecast to have risen 0.5%, up from -0.8% the prior month.

Market Reaction 

If confirmed at this level, the data should generally be seen as risk positive. Any upside beat will obviously amplify the market reaction in terms of leading stocks higher near-term. If data undershoots forecasts, we can expect a risk off reaction with USD likely to trade higher via safe-haven demand. Given the backdrop of ongoing uncertainty around the US debt ceiling negotiations, USD support might grow stronger if a resolution doesn’t look to be forthcoming on the back of today’s talks.

 Technical Views

 USDJPY

 For now, USDJPY continues to hold around the middle of the bull channel. While 132.91 holds as support, and with momentum studies bullish, the focus is on a further push higher with the 139.33 level and bull channel highs the next objective for bulls. To the downside, any break of the channel lows will open the way for a test of 127.24 next.