United States Retail Sales; Inflation and Supply Constraints Key Factors

Retail sale is an economic indicator in the USA that keeps inventory of demands for finished goods, by measuring the purchases of durable and non-durable goods over a defined period of time. It is the primary gauge of consumer spending, which accounts for the majority of the overall economic activities.

United States retail sales for the month of October stood at 0.7% compared to the forecast of -0.2%, although fears that supply constraints could disrupt the holiday shopping season amid a continued shortage of goods.

The consumer price index (CPI), which is a basket of products ranging from gasoline, health care, groceries, and rents rose 6.2% against the forecast of 5.9%, the most since December 1990. Inflation is clearly getting worse with annual core inflation running at a pace of 4.6% compared to the 4% expectation, coupled with the fact that shelter prices are adding to concerning evidence of a broadening in inflation pressure.

However, policymakers such as Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen maintain that the current price pressures are temporary and related to Covid pandemic-specific issues even as they conceded that inflation has been persistent than they expected, they believe normalcy will be attained in the year 2022. The United States President Joe Biden’s economic advisers were also quick to defend the president’s policies amid rising inflation stating that it was a global issue related to the COVID-19 pandemic.

Escalating inflation could cause the Fed to tighten policy more quickly than it has signaled, as the central bank has suggested that it will within the next few weeks start reducing the number of bonds it buys each month. As continuing jobless claims increased by 59,000 to 2.16 million, while the people receiving benefits under all programs fell by 107,095 to 2.56 million.

Economist envisages strong consumer spending, as vaccination rates rise and consumers are more comfortable outside of their homes in restaurants or traveling. A firm decline in the savings rate to the pre-pandemic levels will also support consumer spending, more so, e-commerce sales will continue to grow as consumers demonstrate an ongoing and steady movement towards buying online across all categories.

Nevertheless, Traders should brace themselves up for a period of high volatility as an increase in retail sales will strengthen the USD while a decrease in retail sales will weaken the USD.

In response to the news release, trade the forex market with the following trading instruments on ACT Brokers platform, as the pairs are mostly affected by the data release; EURUSD, GBPUSD, XAUUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, etc.

Time Schedule for Retail Sales release:                                                                          

Date: Tuesday, November 16th, 2021

Time: 2:30 PM

Francis Idowu is a Forex Dealer, Financial market analyst and writer, Data Analyst, and Financial Market Strategist with a background in Economics. He specializes in market strategies, Forex fundamental and technical analysis, and has spent over two years as a financial market contributor, observer, and trading coach. He is well known for his informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Economics and Diploma in Structured Programming and Data processing.