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Why U.S. Retail Sales Will Rock Markets Friday

By Kathy LienForexMay 13, 2021 06:07PM ET
www.investing.com/analysis/why-us-retail-sales-will-rock-markets-friday-200579977
Why U.S. Retail Sales Will Rock Markets Friday
By Kathy Lien   |  May 13, 2021 06:07PM ET
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Stocks rebounded sharply Thursday, but the muted price action in currencies suggest that FX traders are not convinced the selling is over. The U.S. dollar gave back a small portion of yesterday’s gains against the Japanese Yen, Swiss Franc and New Zealand dollar, but was virtually unchanged versus the euro and Aussie. Sterling was the only currency to extend its losses versus the greenback on profit-taking after the pair hit two-month highs on Monday. 
 
It was a rollercoaster ride in the financial markets this week, and volatility is not expected to subside tomorrow with the April U.S. retail sales report scheduled for release. Between the abysmal nonfarm payrolls report and the sharp rise in prices, investors are eager to see how well the consumer is holding up. Economists are looking for retail sales to rise 1% month to month, down from 9.8% in March. We think these forecasts are low given the aggressive pace of vaccinations, strong wage growth and the rollback of restrictions. However, credit-card spending numbers have softened, which is a big reason why a slowdown is anticipated.    
 
If retail sales rises by 5% or more, USD/JPY will hit 110 and EUR/USD will fall to 1.20 as taper talk returns. If it comes in at 1% or lower (even worse, negative), concerns about weak job growth and its impact on consumer spending could send equities and currencies tumbling lower. Anything between 2% and 4% growth will probably trigger a modest relief rally. For now, everyone still expects the U.S. recovery to gain momentum. The Center of Disease Control announced today that fully vaccinated Americans can shed their masks in most indoors and outdoor scenarios. This will encourage more Americans to spend after a year of COVID fatigue.
 
Good numbers will benefit high-beta currencies the most because a strong U.S. recovery provides fuel for a strong global recovery. Yen crosses in particular will do well. Euro area nations are beginning to ease restrictions with travel to Europe likely to resume this summer. The euro, sterling and the Canadian dollar – the currencies of three countries that are prime for a stronger recovery – could outperform.
Why U.S. Retail Sales Will Rock Markets Friday
 

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Why U.S. Retail Sales Will Rock Markets Friday

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Comments (30)
talented trader
talent5566 May 15, 2021 3:37PM ET
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she is suppose to give opposite review so she earn what people loose
Dorian Roberts
Dorian Roberts May 15, 2021 11:27AM ET
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Good review of the currency market, learned some new info.
Ibraheem Khan
Ibraheem Khan May 14, 2021 8:23PM ET
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huge fail.
Jose Viramontes
Jose Viramontes May 14, 2021 4:03PM ET
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FAIL
ze sa
ze sa May 14, 2021 1:00PM ET
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Kathy Equities soared Why? I agree with your opinion "it comes in at 1% or lower (even worse, negative), concerns about weak job growth and its impact on consumer spending could send equities and currencies tumbling lower”.
Jack Reacher
Jack Reacher May 14, 2021 1:00PM ET
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if she knew that, she would be running a billion dollar fund, instead of writing articles, isn't it? :)
Osei Kyei
Osei Kyei May 14, 2021 10:17AM ET
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kathy, why did gold not respond appropriately after the retail sales report
Zaw Zaw
Zaw Zaw May 14, 2021 2:33AM ET
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so thank🎉
Adamo Nals
Adamo Nals May 14, 2021 1:33AM ET
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On top of that you had the greatest buying opportunity for Walmart the last four days. The stock is so undervalued it should be well above $170 a share. Macy’s and Walmart will fly tomorrow in my opinion
Adamo Nals
Adamo Nals May 14, 2021 1:33AM ET
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Everyone should’ve bought Macy’s today. You cannot pass up $15.75 a share for Macy’s especially with retail sales tomorrow
Abdul Sattar
Abdul Sattar May 14, 2021 12:24AM ET
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buy put options for strong dollar and short call option
Jefry Tendean
Jefry Tendean May 14, 2021 12:06AM ET
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ngak ada bhs indo??
sparkly shiny
sparkly shiny May 13, 2021 11:49PM ET
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but what's overall long term of trend of $ if inflation figures go on increasing? wont $ go down ? from last months we all are seeing +ve data failing $ to go up..
hj lee
hj lee May 13, 2021 11:26PM ET
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Please pop the bubble.
Javier Escamilla
Javier Escamilla May 13, 2021 10:17PM ET
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Well since prices has gotten up at least 5% in pretty much everything it should be an easy beat.
sanchopanties chinaman
sanchopanties May 13, 2021 10:16PM ET
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I like Kathy
Shiwoah Lulz
Shiwoah Lulz May 13, 2021 10:16PM ET
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I’d recommend Buzzfeed if you like her articles
William Bailey
William Bailey May 13, 2021 10:04PM ET
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When this reason is wrong, next week it will be upside down cake?
Amie Inconnue
Amie Inconnue May 13, 2021 10:04PM ET
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It's a hard work to uncover logic behind overall emotional and impulsive market.
Frank Castle
Frank Castle May 13, 2021 9:44PM ET
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No matter what the numbers are, the market will be looking forward to the upcoming increase in consumer spending due to the removal of mask restrictions.
Ricky Singh
Ricky Singh May 13, 2021 9:44PM ET
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Consumer spending has nothing to do with mask restrictions but opening of stores. You unvaccinated people, don't take off take mask.
CHAD TENDIES
CHAD TENDIES May 13, 2021 8:51PM ET
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They will be terrible
Hape Fritt
Hape Fritt May 13, 2021 8:51PM ET
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I believe they will be, but what we will be told is what they want us to hear.
Lake Lot
Lake Lot May 13, 2021 8:51PM ET
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What we hear is only if we listen
Fauzi Ghozali
Fauzi Ghozali May 13, 2021 8:49PM ET
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Thanks for info.
Chris Poulos
Chris Poulos May 13, 2021 7:32PM ET
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kathy mentions yen crosses could benefit if retail sales number is good. keep your eye on aud/jpy ... i suggest selling any rally that takes it back up toward recent highs at 85.80. check out a 5 or 10 year chart ... aud/jpy is absurdly high right now. fading any rallies has been a component of my trading strategy for months.
Chris Poulos
Chris Poulos May 13, 2021 7:32PM ET
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in the 6 months before covid it was trading between 70 and 76 ... and now its near 86??!! what? makes no sense. fade any rallies!
Bilqis Faiha
Bilqis Faiha May 13, 2021 7:10PM ET
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Agree with that... 🤗
la popeye
la popeye May 13, 2021 6:39PM ET
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but now we have the sound of canons and muted un security committee....lead by China. Iran will go against Israel....domino
la popeye
la popeye May 13, 2021 6:37PM ET
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everything will be done to avoid a crash. don t worry.
Damso Daniel
Damso Daniel May 13, 2021 6:36PM ET
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Can I know everything about it
Justin Caprye
Justin Caprye May 13, 2021 6:26PM ET
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I dont think one little bit of positive data couldnt change the long-term downward, the more-immediate post-covid, biden era, trump economic policy un-doing spiral of USD
 
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