Updates to the U.S. Retail Sales report may spark a bearish reaction in the U.S. dollar as household spending is expected to increase 0.1% in July versus the 0.5% expansion the month prior.

A marked slowdown in private-sector consumption may dampen the appeal of the greenback as it casts a weakened outlook for growth, with the U.S. dollar at risk of facing near-term headwinds should the data prints dampen bets for four Fed rate-hikes in 2018.

Keep in mind, recent comments from the Federal Open Market Committee (FOMC) suggest the central bank will deliver a rate-hike in September as ‘the Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,’ but mixed data prints coming out of the economy may impede on the Fed’s hiking-cycle as ‘many District contacts expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions, both domestically and abroad, on future investment activity.’

With that said, a dismal development may curb the recent weakness in EUR/USD, but an above-forecast Retail Sales print may fuel a further decline in the exchange rate as it boosts bets for four Fed rate-hikes in 2018.

IMPACT THAT THE U.S. RETAIL SALES REPORT HAS HAD ON EUR/USD DURING THE LAST PRINT

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JUN

2018

07/16/2018 12:30:00 GMT

0.5%

0.5%

-12

-7

June 2018 U.S. Retail Sales

EUR/USD 5-Minute Chart

U.S. Retail Sales increased another 0.5% in June after expanding a revised 1.3% the month prior, with the advance led by a 2.2% rise in demand for health & personal care items. A deeper look at the report showed spending on motor vehicle & parts climbing 0.9%, with demand for building materials rising 0.8%, while discretionary spending on clothing slipped 2.5% during the same period.