US retailing is about to be on the receiving end of a significant check on the consumer. The consensus is that sales rose 0.5% in May, with the ex-auto numbers matching that. For markets, the most important number is the control group, which excludes autos, gasoline and construction materials. It’s expected to rise 0.4% per month, but that’s not to say the retail sales numbers haven’t been adjusted for inflation.
On a year-on-year basis, sales rose 4.87% in April, barely above inflation.
There is unlikely to be any major change in the market on a retail sales basis for two reasons:
1) Varsh is coming later. The FOMC decision at 2 pm ET and the press conference 30 minutes later are big events and most market participants will be reluctant to chase any misses.
2) It’s a bit stale. Gasoline is eating up a big chunk of the US wallet due to the war, but crude is back to $76 and that will be a gamechanger for June data and consumer confidence if it holds.
Currently, USD/JPY is down 15 pips to 160.30 and is the place to watch today due to the Fed’s decision and the possibility of intervention.
USD/JPY 5 min
Specifically, Bank of America – based on its card data – is projecting sales growth of 0.8% compared with a 0.7% increase for the control group.
