US April Retail Sales Forecast: Rebound Expected, US Dollar Hangs On Debt Ceiling

The US Census Bureau will release Retail Sales data in the United States (US) on Tuesday. The headline number is forecast to increase by 0.7% in April after posting the second straight monthly drop in March.

The US Dollar (USD) has been on a sustained recovery following last week’s April United States Consumer Price Index (CPI) figures. The US Retail Sales report could significantly impact the US Dollar’s valuation amid a lack of high-impact economic data releases from the US docket this week.

What To Expect In The Next US Retail Sales?

Tuesday’s US economic calendar features the release of the Retail Sales report for the fourth month of the year.

Monthly, the headline Retail Sales are seen rebounding 0.7% during the reported month. Excluding autos, core Retail Sales are likely to have jumped 0.4% in April as against a 0.4% decline registered in March. US Retail Sales Control Group for April is foreseen at 0%, compared with March’s 0.3% decrease.

Economists expect the increase to be driven by robust spending on cars and fuel. Meanwhile, the Financial Times (FT) reported that “the outlook for retail sales is mixed as continued strength in the labor market and wages is likely to support consumer spending.” 

According to analysts at BBH, “the data highlight will be April retail sales Tuesday. The headline is expected at 0.8% m/m vs. a revised -0.6% (was -1.0%) in March, while ex-autos is expected at 0.4% m/m vs. a revised -0.4% (was -0.8%) in March.  The so-called control group used for GDP calculations is expected at 0.3% m/m vs. -0.3% in March. In late April, the Census Bureau reported its annual revisions to the retail sales data.” 

When Is US April Retail Sales Report Released, And How Can They Affect EUR/USD?

The Retail Sales data is scheduled for release at 12:30 GMT on Tuesday. With the US Dollar recovering ground to a monthly high in the wake of mounting US default fears and looming banking sector concerns, the EUR/USD pair remains vulnerable to more downside risks below the 1.0900 psychological mark. Stronger-than-expected US Retail Sales data is likely to help ease economic worries, lifting the main currency pair at the expense of the Greenback.

On the other hand, weaker Retail Sales details are likely to rekindle recession fears while reinforcing the market’s expectations of a US Federal Reserve (Fed) rate cut as early as July. Worries over a potential economic downturn could provide a fresh leg in the ongoing recovery of the safe-haven US Dollar.

Currently, markets are pricing an 82% chance of the Federal Reserve holding rates at the current level in June while maintaining a 33% chance of a rate cut in July.

Heading into the essential release, the US Dollar is struggling to extend last week’s rally, as risk sentiment has somewhat improved after US President Joe Biden said over the weekend that the talks with Congress on raising the US government’s debt limit were moving along. President Biden added that more will be known about their progress in the next two days.

US President Biden will meet with the congressional leaders on Tuesday to discuss a plan to raise the nation’s debt limit and avoid a catastrophic default.

About US Retail Sales

The Retail Sales released by the US Census Bureau measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive (or bullish) for the US Dollar, while a low reading is seen as negative (or bearish).

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