US dollar surges ahead of US retail sales data.
The US dollar (USD) edged higher on Tuesday as a result of many events that occurred overnight. First and foremost for financial markets was the interview with US Federal Reserve (Fed) Chairman Jerome Powell. Which disappointed traders who expected to hear something about guidance. But his lips stayed locked. In Milwaukee, former US President Donald Trump grabbed the stage. Following his shooting over the weekend, declaring that Ohio Senator J.D. Vance will be his running mate.
On the economic front, everything will focus around the consumer. With US Retail Sales and Import/Export Prices for June being released later in the day. Rewinding to the previous Retail Sales number demonstrated. That consumers had had enough of the present high costs and were willing to wait for their next buy till prices fell. If this holds true for June’s statistics. Retail Sales will fall significantly, resulting in a lower US dollar.
Daily Market movers: Traders are pricing in a Trump victory, with the Fed keeping a close eye on estimates.
With former US President Trump’s selection of J.D. Vance as running mate, the core subject of Trump’s campaign becomes extremely evident. As Senator Vance is known for his desire for more harsh China is facing tough measures. This entails a larger and broader tariff package against China and other nations that import goods into the US.
At 12:30 GMT, the monthly Retail Sales statistics for June will be announced, along with the Import-Export Price Index.
Retail sales are predicted to remain flat at 0% this month after rising by 0.1% in May.
Retail Sales excluding Autos are expected to rise 0.1% after falling 0.1% in May.
As usual, changes to earlier statistics will be more significant and market-moving than actual data.
The monthly Import Price Index is predicted to rise 0.2% in June, from -0.4% the previous month.
The monthly Export Price Index was -0.6% in May, with no projections made.
Around 14:00 GMT, The Business Inventories figures for May will be revealed, and they are projected to remain steady at 0.3%.
At the same time, the National Association of Home Builders will release its July Housing Market Index. Previously, the Index was at 43, with a slight increase to 44 projected.
Equity markets are quite uneven, with no apparent pattern; additionally, European shares are underperforming. US futures are modestly up.
The CME Fedwatch Tool predicts an 89.4% possibility of the Fed cutting interest rates by 25 basis points (bps) in September, and a 10.4% chance of a 50-bps cut. An unchanged scenario with no rate change is out of the question.
The US 10-year benchmark rate currently trades at 4.20%, nearing the yearly lows.
