Will US Retail Sales slow and will the Dollar soften? Economists at ING analyze USD outlook.
Given that powerful US growth and the US 'exceptionalism' story have largely been based on the US consumer staying in work and spending, a softer Retail Sales figure could test some of the late arrivals to the long Dollar trade. That should mean that DXY will struggle to break 106.75 resistance and instead may end up pressing intra-day support at 106.00.
In addition to retail sales, today also sees US Industrial Production and several Fed speakers. Again, we are on the lookout for any consistent language from the Fed that tighter financial conditions (from the rise in bond yields) mean that the Fed does not need to tighten any further.
Later in the US day, we get to see Treasury International Capital (TIC) flow data for August. Chinese holdings of US Treasuries have fallen to $821bn from $1.04tn at the start of 2022. A further decline could add to woes in the US bond market and also start to question whether a rise in US Treasury yields on the back of a higher term premium really is good news for the Dollar after all.
See – US Retail Sales Preview: Forecasts from six major banks, tepid gains after surging since spring
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