US Retail Sales Data on the Eve of FOMC Meetings

US Retail Sales Data on the Eve of FOMC Meetings

US retail sales are one of the key indicators, providing information about the current state of the US economy. Yesterday’s retail sales were positive as the indicator showed growth. USD “bulls” are still in the game. However, the situation is not as comfortable as it may seem at first glance.

May retail sales grew by 0,5%. Experts supposed that the rise would not overcome 0,3%. As for the yearly retail sales indicator, it reduced to 2,5%.

Those results are not significant as we need to understand the reason of the matter. The FOMC is likely to pay attention to those figures than to the main reason for the growth – season increase in fuel prices. Although the main trend in retail sales looks downwards that does not cause much optimism.

As for the growth in fuel expenses, they showed a significant decrease (about 10%) since May 2015.

It is necessary to consider another important matter. Market treats all this data coming from the governmental bodies on its own. The retail sales are no exception.

Stock indexes are almost at their historical highs. USD still in the uptrend as we may state it according to the quotas of the majors.

FOMC meetings take place today in the evening. It may be considered as one of the most important in this year as FED members announced the probability of interest rates, growth during their last meetings if economic data meets their requirements.

It is to mention that USD started its growth after the last FOMC minutes. However, the last non-farms temporarily broke the uptrend. A significant decrease in a number of new payrolls called into question the possibility of further growth in interest rates.

The other US data including retail sales give some hope to USD “Bulls” if the FOMC treats only the results of retail sales and not their yearly dynamics, of course. FOMC members may have already made their decision and they will use those positive data to confirm their rightness.

There is another important data to see today. A so-called Dot Plot shows the FOMC members projections on the interest rate during the year.


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