Trading News Events: U.S. Advance Retail Sales - Will Seasonal Factors Spur Better-Than-Expected Retail Sales Report?
A pickup in Advance U.S. Retail Sales may generate short-term decline in
EUR/USD as stronger consumption raises the growth and inflation outlook
for the world’s largest economy.
What’s Expected:
Why Is This Event Important:
Indeed, an expansion in household spending is likely to heighten the appeal of the greenback and boost interest rate expectations as a growing number of Fed officials show a greater willingness to normalize monetary policy in mid-2015.
However, sticky inflation along with the slowdown in private sector
credit may drag on household spending, and a dismal development may
foster a more meaningful rebound in EUR/USD as it raises the FOMC’s
scope to zero-interest rate policy (ZIRP) for an extended period of
time.
How To Trade This Event Risk
Bullish USD Trade: U.S. Retail Sales Climbs 0.4% or More
- Need red, five-minute candle following the release to consider a short trade on EUR/USD
- If market reaction favors a long dollar trade, sell EUR/USD with two separate position
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit; set reasonable limit
- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same setup as the bullish dollar trade, just in the opposite direction
EUR/USD Daily Chart
- Despite the string of lower-highs, a bullish break in the Relative Strength Index (RSI) may highlight a larger for EUR/USD.
- Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
- Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)
| Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
|---|---|---|---|---|---|
| OCT 2014 |
11/14/2014 13:30 GMT | 0.2% | 0.3% | -17 | +85 |
U.S. Retail Sales increased 0.3% from the month prior, with 10 of the 13 components showing an expansion in October. Despite stagnant wage growth, the resilience in private sector consumption may put increased pressure on the Fed to normalize monetary policy as it remains one of the leading drivers of growth. The initial reaction to the better-than-expected print was short-lived as EUR/USD climbed above the 1.2500 region during the North American trade to end the day at 1.2521.
