US: Look for a relatively strong retail sales data - TDS

Research Team at TDS, is looking for a relatively strong US retail sales report this month reflecting a 0.6% increase in headline sales and a 0.4% in the control group (excluding autos, gas, building materials, food services).

Key Quotes

“The reported advance in motor vehicle sales (17.9m vs 17.6m units) and higher gasoline prices are expected to boost sales figures in October. In the core, we see scope for a solid 0.4% rebound following unusually weak prints in the prior three months on the back of rising wages and robust job growth. Given the stronger than expected personal spending last month, upward revisions to September retail sales are likely. However, recent dips in consumer sentiment and election uncertainty present some downside risk to October.

Foreign Exchange

We view the risks around the data and subsequent implication for the USD as asymmetric. At this time, the USD is moving aggressively off the backup in rates. Unless the data disappoints, the USD is likely to extend this move further on the basis that a broadly in-line consensus expectation or better (and/or if positive revisions occur), which could reinforce the trend in recent days. Disappointment in the data might inject a dose of reality for the market which may be getting ahead of itself in terms of extrapolating trends post-Trump victory, but we suspect until the sell-off in rates abates, this will be viewed as a buying opportunity.”