Last time I talked about Retail Sales, the main idea was that worse-than-expected Retail Sales releases are bad because they imply less consumption spending. This would be bad both for the stock market, given that less spending means less profits, and the currency market given that it would suggest that the economy is growing more slowly than expected. The latest US Retail Sales release showed that the numbers for September were much worse than anticipated (see below). How did the market react?
To begin with, the stock market (Chart above) dropped by 2 points in the half hour after the announcement. Similar to this, the USD (Chart below) dropped 17 pips upon the announcement. This expected negative reaction to the results highlights the importance of this indicator as regards to the overall state of the economy and also comes in a climate of overall uncertainty regarding the developments in US foreign policy.
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Dr Nektarios Michail