On Thursday forex traders were delivered a rather big disappointment as far as US advanced retail sales are concerned. The release on Thursday covered the month of May and economists expected an increase of 0.6%. Retail sales excluding autos as well as retail sales excluding autos as well as gasoline were both expected to increase by 0.4%. The most important part of the advanced retail report, the retail sales control group, was also expected to increase by 0.4%.
The report showed disappointments across all major segments. Retail sales rose only 0.3% and retail sales excluding auto sales rose a minor 0.1%. Retail sales excluding autos and gasoline were reported at 0.0% while retail sales in the control group were also reported at 0.0%. This spells a bigger than expected problem for the US economy as the weather was good, but failed to translate to consumers spending money and supporting the economy.
The US economy could be in a much wider than expected slowdown especially if additional measures will come in weaker than expected. The US Dollar may sell-off heavily against major currency pairs and given the recent correction in the EURUSD forex traders are advised to seek out long entry positions in this currency pair.
Inflation eased as well which will give the US Federal Reserve additional breathing room to continue their current monetary policy. The core PPI actually contracted in May by 0.1% while the annualized core PPI was reported at 2.0%, up 0.1% from April. The PPI contracted by 0.2% while the annualized PPI was reported at 2.0%, down 0.1% from April.
The miss on inflation, economists were looking for the annualized core PPI to rise to 2.3% while the annualized PPI was expected to increase to 2.4%, allowed the US Dollar to remain stable and not sell-off during Friday’s trading session as forex traders expected the US Federal Reserve to reduce stimulus by an additional $10 billion to $35 billion per month during their next meeting.