US Retail Sales: A Turning Point For Markets?

On Wednesday at 4:30 PM Amman time, the markets will be anticipating the release of US Retail Sales data.


The Retail Sales Index measures the total value of goods sold by retailers and reflects the total amount of money spent by consumers on goods and services. It is considered a leading indicator of consumer spending and economic activity, as consumer spending constitutes two-thirds of the total economy.


Retail sales data is usually collected by the US Census Bureau and reported on a monthly basis. The index gives a snapshot of consumer spending trends and can be used to track changes in consumer behavior and confidence.


Strong retail sales indicate that consumers trust the economy and therefore spend more money, which can positively affect the economy. While weak retail sales indicate that consumers are spending less, which could lead to an economic slowdown.


The reading to be issued on Wednesday will be critical for the US, and may affect the monetary policy action followed by the US Federal Reserve. Official statements even indicated that stronger than expected data may force more aggressive hikes from the Fed.


Markets may also be affected by this data, and a higher than expected reading could suggest that inflation fears remain strong, potentially leading the Fed towards tighter monetary policy, which positively affects the US Dollar and negatively weighs on gold and stocks. 


Therefore, markets will be closely monitoring the upcoming reading, and whether it is higher than the previous reading of -1.1%, or as expected at 1.9%.