Forex and Retail Sales market are contact together
Overall US Retail Sales numbers came out better than expected at 2.7% versus 2.0% expectations. Excluding auto (which were helped by the Cars for Clunkers program) and gasoline sales, the number was a rise of 0.6%, which was also higher than estimates. On the news the dollar has strengthened.
Forex traders are positive about the news as it relates that US consumers are heading back to stores and aren’t as pessimistic about the future as thought. The results occurred even though initial surveys reported that August “Back to School” sales were terrible.
Even though the results were better than expected, Forex traders will probably be looking for additional confirmation of positive sales before deciding that the US consumer is back. We believe the results may have been assisted by “clearance sales” of retail chains that enticed consumers that had been postponing their purchases.
How will this affect on the dollar?
Interestingly though, is the fact that the dollar was able to rally even as stock indexes spiked higher. This conveys that Forex traders see the US consumer as the main engine of growth needed to fix the US economy. Therefore, although the current precedent is for positive US economic news to be negative for the dollar, we may see a shift where consumer related good news leads the dollar higher.
