Forex: EUR/USD- Trading the U.S. Retail Sales Report

Trading the News: U.S. Advance Retail Sales

What’s Expected:

Time of release: 11/14/2012 13:30 GMT, 8:30 EDT

Primary Pair Impact: EURUSD

Expected: -0.2%

Previous: 1.1%

DailyFX Forecast: -0.3% to 0.2%

Why Is This Event Important:

U.S. retail sales are expected to contract 0.2% in October following the devastating aftermath of Hurricane Sandy and a dismal report may drag on the dollar as it raises concerns for a slower recovery. As Fed doves maintain a cautious outlook for the world’s largest economy, a dismal print may fuel speculation for additional monetary support, and the dollar may face additional headwinds over the remainder of the year should the central bank show a greater willingness to carry ‘Operation Twist’ into 2013.

Recent Economic Developments

The Upside

Release

Expected

Actual

U. of Michigan Confidence (NOV P)

82.9

84.9

Consumer Credit (SEP)

$10.175B

$11.365B

Change in Non-Farm Payrolls (OCT)

125K

171K

The Downside

Release

Expected

Actual

Average Hourly Earnings (YoY) (OCT)

1.7%

1.6%

Challenger Job Cuts (YoY) (OCT)

--

11.6%

Existing Home Sales (MoM) (SEP)

-1.6%

1.7%

The ongoing improvement in household sentiment paired with the resilience in private sector consumption may boost the retail sales figure, and a positive development may fuel a near-term rally in the U.S. dollar as it dampens the Fed’s scope to expand its balance sheet further. However, subdued wage growth along with the rebound in planned job cuts may push Americans to reduce spending, and a sharp decline in consumption may dampen the appeal of the reserve currency as the central bank keeps the door open to conduct more quantitative easing.

Potential Price Targets For The Release

Forex_EURUSD-_Trading_the_U.S._Retail_Sales_Report_body_ScreenShot043.png, Forex: EUR/USD- Trading the U.S. Retail Sales Report

As the double top formation in the EUR/USD pans out, it looks as though the pair is look at the 23.6% Fibonacci retracement from the 2009 high to the 2010 low (1.2640-50) for near-term support, and we may see a short-term correction in the exchange rate as the relative strength index continues to hold above oversold territory. However, as the oscillator maintains the downward trend carried over from September, a shift in the Fed’s policy outlook may threaten the rebound from the yearly low (1.2041), and the pair may trade heavy going into the following year as the fundamental outlook for the U.S. improves.

How To Trade This Event Risk

Forecasts for a drop in retail sales certainly casts a bearish outlook for the greenback, but an above-forecast print could pave the way for a long U.S. dollar trade as it dampens expectations for more easing. Therefore, if private spending holds flat or unexpectedly increases from the previous month, we will need a red, five-minute candle following the release to establish a sell entry on two-lots of EURUSD. Once these conditions are met, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to preserve our gains.

On the other hand, the lack of wage growth paired with the ongoing slack in the real economy may ultimately lead to a weak sales report, and a marked contraction in household spending may dampen the appeal of the greenback as currency traders maintain bets for more easing. As a result, if consumption tracks lower from the previous month, we will implement the same setup for a long euro-dollar trade as the short position laid out above, just in reverse.

Impact that the U.S. Advance Retail Sales report has had on USD during the last month

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

SEP 2012

10/15/2012 12:30 GMT

0.8%

1.1%

-5

-17

September 2012 U.S. Advance Retail Sales

Forex_EURUSD-_Trading_the_U.S._Retail_Sales_Report_body_ScreenShot042.png, Forex: EUR/USD- Trading the U.S. Retail Sales Report

Household spending increased another 1.1% in September after expanding a revised 1.2% the month prior, and the resilience in private sector consumption may encourage the Federal Reserve to scale back its dovish tone for monetary policy as the economic recovery gradually gathers pace. Indeed, the better-than-expected print sparked a bullish reaction in the dollar, with the EURUSD slipping back below the 1.2950 figure, but we saw the pair consolidate throughout the North American trade as it ended the day at 1.2947.

To contact David, e-mail dsong@dailyfx.com.

Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, please follow this link.

New to FX? Watch this Video

Questions? Comments? Join us in the DailyFX Forum

View the Expo Presentation on ‘Trading the News’ For Additional Resources

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Markets Right Now: Banks lead US stocks higher on rate hopes Associated Press - 14 minutes ago

    The latest on developments in global financial markets (all times local): 11:45 a.m. Banks are leading stocks higher at midday as investors hope for higher interest rates. Wells Fargo, the nation's largest ... … More »

  • Oil down nearly 2 percent on surging OPEC output, strong dollar
    Oil down nearly 2 percent on surging OPEC output, strong dollar Reuters - 25 minutes ago

    Oil prices fell nearly 2 percent on Monday, snapping two consecutive days of gains, on caution over galloping Middle East crude output and a stronger dollar boosted by speculation of a U.S. rate hike by the year-end. Iraq, which has exported more … More »

  • U.S. assets gain, European shares dip on rising Fed rate hike bets
    U.S. assets gain, European shares dip on rising Fed rate hike bets Reuters - 27 minutes ago

    U.S. stocks rose on Monday, helped by gains in financial shares after comments from top Federal Reserve officials on Friday bolstered expectations for an interest rate hike from the U.S. central bank this year, while European shares dipped and the … More »

  • 'IS suicide bomber' kills 71 army recruits in Yemen
    'IS suicide bomber' kills 71 army recruits in Yemen AFP News - 37 minutes ago

    An Islamic State group militant rammed his explosives-laden car into an army recruiting centre in Aden Monday, killing 71 people in the deadliest jihadist attack on the Yemeni city in over a year. … More »

  • Liz Weston: 5 money myths you probably believe
    Liz Weston: 5 money myths you probably believe Associated Press - 1 hour 9 minutes ago

    Managing money can be complicated, and myths are often born from people's struggles to make it simpler. But simplistic solutions can cost you instead of saving you money. If you believe any of these five ... … More »

  • BOJ Needs Massive Move to Shock & Awe, $2 Trillion Investor Says Bloomberg - 1 hour 19 minutes ago

    “It is how much they do, and whether they can create that kind of shock and awe at this point in the cycle,” said Mark Haefele, global chief investment officer at UBS Wealth Management, in a Bloomberg Television interview, on Monday. “They could … More »

  • Grain lower, livestock mixed Associated Press - 1 hour 33 minutes ago

    Grain futures were lower Monday in early trading on the Chicago Board of Trade. Wheat for Sept. delivery was 10.50 cents lower at $3.7260 a bushel; Sept. corn was 2.25 cents lower at $3.14 bushel; Sept. ... … More »

  • Singapore's GIC buys stake in Vietnam's bank AFP News - 1 hour 35 minutes ago

    Singapore sovereign wealth fund GIC will buy a 7.7 percent stake in Vietnam's biggest bank, both companies said in a joint statement on Monday. GIC signed a memorandum of agreement to buy 305.8 million new shares of Vietcombank, the fund's first … More »

  • Wall St rises as hawkish Fed boosts financial stocks
    Wall St rises as hawkish Fed boosts financial stocks Reuters - 1 hour 43 minutes ago

    Yellen, addressing a gathering of global central bankers on Friday, said the central bank was close to meeting its goals of maximum employment and stable prices, while describing consumer spending as "solid". Yellen gave little indication of when … More »

  • Foreign experts in Egypt to probe Russian airliner crash AFP - 1 hour 57 minutes ago

    Russian and German experts arrived in Cairo Monday to inspect the wreckage of a Metrojet plane downed over Sinai, hoping to pinpoint how it came apart, the aviation ministry said. The Islamic State group ... … More »

  • Jualo receives additional ‘multi-million US Dollar’ in their Series A round
    Jualo receives additional ‘multi-million US Dollar’ in their Series A round e27 - 2 hours 2 minutes ago

    In June, the e-classifieds platform announced a Series A round led by NSI Ventures Last June, e-classifieds platform Jualo announced that it has received a “multi-million US Dollar” Series A funding led by NSI Ventures. Today, the Jakarta-based … More »

  • US stocks higher amid focus on possible Fed rate rise AFP - 2 hours 4 minutes ago

    Wall Street stocks were slightly higher Monday as traders focused on the US July jobs report coming later this week which could, if strong, support an early rate rise by the Federal Reserve. Fed Chair ... … More »

  • Grenade attack on home of Kosovo TV chief over border deal
    Grenade attack on home of Kosovo TV chief over border deal AFP News - 2 hours 13 minutes ago

    A shadowy activist group in Kosovo claimed responsibility Monday for an attack on the home of Kosovo's public broadcast chief, in protest over a controversial border deal. "An explosive device was thrown into the backyard" of Mentor Shala, general … More »

  • Brussels crime lab attacked to 'destroy evidence'
    Brussels crime lab attacked to 'destroy evidence' AFP News - 2 hours 33 minutes ago

    Attackers rammed a car through the gates of Belgium's national crime laboratory on Monday in Brussels and then started a fire in what officials said may have been an attempt to destroy evidence. The incident comes as Belgium remains on high alert … More »

  • Aeroflot flies back into black AFP - 2 hours 38 minutes ago

    Russia's flagship carrier Aeroflot said Monday it had piloted a return to profit after reining in its costs and enjoyed an ascent in passenger numbers among its company airlines. The majority state-controlled ... … More »

  • Exclusive - German trade group slashes exports forecast as Brexit hit looms
    Exclusive - German trade group slashes exports forecast as Brexit hit looms Reuters - 3 hours ago

    Germany's BGA trade association slashed its 2016 forecast for export growth, its head said on Monday, predicting sales abroad by Europe's biggest economy would later stagnate as the delayed impact of Brexit hit home. Global demand for German goods … More »

  • Cyber threat grows for bitcoin exchanges
    Cyber threat grows for bitcoin exchanges Reuters - 3 hours ago

    When hackers penetrated a secure authentication system at a bitcoin exchange called Bitfinex earlier this month, they stole about $70 million worth of the virtual currency. The latest survey of 46 securities exchanges released three years ago by … More »

  • Greek economy grows in second quarter but strong rebound elusive
    Greek economy grows in second quarter but strong rebound elusive 4 hours ago

    Greece's economy grew modestly in the second quarter but weak demand and scant investment mean a strong rebound after years of recession remains elusive a year after the country nearly crashed out of the euro. Rating agencies Moody's and S&P are … More »

  • Global from Day One co-invests in New Zealand firm’s US$5M Series A round
    Global from Day One co-invests in New Zealand firm’s US$5M Series A round 4 hours ago

    Global from Day One is a cross-border technology fund with the majority of capital to be invested in New Zealand and Taiwanese startups Spotlight Reporting, a Wellington-based cloud software company, has secured US$5 million in Series A funding from … More »

  • New suspected MH370 debris found in Mozambique
    New suspected MH370 debris found in Mozambique AFP News - 5 hours ago

    A South African hotelier said Monday he had picked up a piece of aircraft wreckage off the Mozambican coast in the latest possible find of debris from the missing MH370 flight. Mozambique's aviation authorities in Maputo said they had been informed … More »

  • Unbiased New Launch Review – Lake Grande
    Unbiased New Launch Review – Lake Grande Propwise.sg - 5 hours ago

    By KK Tong (guest contributor) 23 July 2016 was the official launch date of Lake Grande, a 99-year leasehold development (lease starting from 9 June 2015) in Jurong West. On the launch weekend, 436 units out of a total of 710 units were sold. The … More »

  • Australia's richest woman considers bid for country's largest ranch - source Reuters - 6 hours ago

    Australia's richest woman Gina Rinehart is partnering with Chinese developer Shanghai CRED to bid for S. Kidman & Co, the country's largest private land holding, a source close to the sales process said on Monday. Rinehart's participation in a bid … More »

  • iPhone spyware spotlights Israel's secretive surveillance industry
    iPhone spyware spotlights Israel's secretive surveillance industry AFP News - 6 hours ago

    The discovery of sophisticated spyware to infiltrate and remotely take control of iPhones without leaving a trace has put a spotlight on Israel's secretive surveillance industry, considered among the world's most advanced. Apple rushed out a … More »

  • China Stock Traders Feel Heat With 774 Probes in Two Months (3) Bloomberg - 6 hours ago

    Liu Shiyu, who was appointed chairman of the China Securities Regulatory Commission in February, has emphasized the need for a tough stance on market excesses. The moves come amid signs China’s policy makers are also looking to cool gains in the … More »

  • SE Asia Stocks-Fall as Fed rate hike signals get louder Reuters - 6 hours ago

    By Aparajita Saxena Aug 29 (Reuters) - Most Southeast Asian stock markets closed lower on Monday after comments from U.S. Federal Reserve Chair Janet Yellen hinting at an interest rate hike weighed on ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.124-0.005-3.88%
    N21.SI
    0.735-0.020-2.65%
    G13.SI
    0.128+0.014+12.28%
    RE4.SI
    0.3550.0000.00%
    E5H.SI
    4.12-0.10-2.37%
    Z74.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.355+0.115+47.92%
    BAZ.SI
    0.151+0.024+18.90%
    D79.SI
    0.23+0.03+15.00%
    AWI.SI
    0.475+0.060+14.46%
    588.SI
    0.128+0.014+12.28%
    RE4.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.205-0.105-33.87%
    BCZ.SI
    0.25-0.10-28.57%
    BKX.SI
    0.13-0.05-27.78%
    AYL.SI
    0.165-0.055-25.00%
    BKZ.SI
    0.745-0.130-14.86%
    564.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3600+0.0017+0.13%
    USDSGD=X
    1.5195-0.0001-0.01%
    EURSGD=X
    1.7783-0.0026-0.15%
    GBPSGD=X
    75.0880+0.406+0.54%
    SGDJPY=X
    5.7013-0.0034-0.06%
    SGDHKD=X
    2.9755+0.0092+0.31%
    SGDMYR=X
    9,753.2324+5.0439+0.05%
    SGDIDR=X
    4.9096+0.0034+0.07%
    SGDCNY=X
    1.0292+0.0029+0.28%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,327.20+1.30+0.10%
    GCZ16.CMX
    18.74+0.09+0.48%
    SIU16.CMX
    96.96+1.16+1.22%
    ^XAU
    2.080.00-0.02%
    HGU16.CMX
    46.80-0.84-1.76%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.19-0.05
    ^FVX
    1.59-0.05
    ^TNX
    2.24-0.06
    ^TYX