ACT Markets > Blog > Forex > Technical Analysis > CURRENCY QUAKE: BRICS Alliance Sends Shockwaves Through US Dollar – Will the Retail Sales Say Otherwise?

CURRENCY QUAKE: BRICS Alliance Sends Shockwaves Through US Dollar – Will the Retail Sales Say Otherwise?

May 16, 2023 Financial Market, Technical Analysis

US Retail Sales

US Retail Sales data is a commonly traded economic indicator in the forex market, as it provides insight into the overall health of the US economy. The US Census Bureau releases monthly reports on retail sales, which reflect the total value of goods sold by retailers based on a sampling of retail stores of different types and sizes across the country.

Traders and investors may use the information from US Retail Sales reports to make informed trading/investing decisions based on how they believe the market will react to the news. For example, if the report indicates stronger-than-expected retail sales, it may lead to a rise in the US dollar against other currencies and vice-versa.

The previous figure was -1.0%, and the United States Census Bureau is so confident in their economy this time, making their forecast higher than the previous at 0.8%

GOLD Daily Chart

The US economy seems to be recovering a little bit as the previous NFP and unemployment data caused the Dollar to gain some significant strength. This is why the Gold still looks bearish because Investors are hopeful about the strength of the US economy regardless of the threats posed by the BRICS Nation. If the economy does well, money will be pulled out of the safe Haven, into an active economy for more lucrative returns on investments causing a decline in Gold. But ironically, the reversal formations on Gold are still in their early stage (about 800+ pips channel which is not so much an encouraging move for Gold in an entire month). While there is a possibility of a decline in Gold price if the US Retail sales data comes out as strong, Gold could also push up from two major areas:

  • The base of the upward channel at the 1990s – 1995s or
  • The Support Zone at the 1960s – 1935s

This then provides an opportunity for a short-term Sell for Intraday traders.

If the actual release is greater than the forecast, it is good for the currency, which means strength for the Dollar and a decline for GOLD – all things being equal.

Why do Investors and Traders care?

A stronger-than-forecasted retail sales figure in the United States would be interpreted as a positive signal for the economy, indicating robust consumer spending and overall economic growth. Traders and investors would likely respond with increased confidence, leading to a potential rally in the stock market and a massive decline in the price of Gold. This positive sentiment would drive buying activity in consumer-focused sectors such as retail, consumer discretionary, and consumer staples. As a result, stock prices in these sectors could experience an upward surge.

The strength in retail sales would also reflect positively on the US Dollar notwithstanding the shockwave the BRICS nation hopes to send on the US Dollar through its strong alliances. Foreign investors may perceive the US as an attractive investment destination, leading to increased demand for the currency. Consequently, the US Dollar could strengthen against other currencies.

Now reach out for your ACT Trading platform, mark up your USD pairs, FUND your trading account if you are yet to, and position yourself to ride the economic wave.

US Dollar Pairs you can trade include USDCHF, USDCAD, USDJPY, AUDUSD, EURUSD, GBPUSD, NZDUSD, XAUUSD (gold), XAGUSD, BTCUSD, ETHUSD, US100, US30, US500, APPLE, FACEBOOK, NETFLIX, COCA-COLA, FORD and so on.

Schedule for The US Retail Sales release:    Tuesday 16th April 2023.  1:30 pm (W.A.T)

Author:
Adewuyi Ayodeji James known as A.A.James is a forex analyst and a passionate educator. He has almost a decade of experience in the global financial market and has taught hundreds of students across different countries and growing. He once served as a Business Development Manager, and the Head of Client Relations for Suavally Market Global, a leading forex institute in Africa. During his time at Suavally, He also doubles as the education Champion for one of her Partner brokers M4Market. A.A. James is a Dealer/Educator at ACT Brokers, the only Forex Brokerage firm with a dealing desk in Nigeria. He also teaches at RUBY FX Solutions. A.A. James is the Face and Host of the popular MORNING MARKET; a daily market analysis that holds every morning before the London session opens, with the growing attendance of clients from different brokers from across the globe. He is a Well sought-after retail FOREX Educator, both independent and Trainer for forex Broker(s). A public speaker, Mentor, and Life coach. A Recording Artist, Music, and Art Director with over a decade of active experience.

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