Core Retail: Better Than Before?

The Event:

At 8:30 AM EST on Friday, March 12th, 2010 the Census Bureau releases its core Retail Sales figure.


This is a monthly release that measures consumer sales at retail outlets not including automobiles. Forex traders view this release as a precursor to the Gross Domestic Product or GDP release. It’s considered an early gauge of consumer demand. Consumer sales account for 2/3 of all economic activity in the United States so it’s an important figure regarding the future course of the economy. The figure is determined by the total receipts of all retail sales based on a sample of stores. Taxes, returns and finance charges are not counted. The figure is presented as the yearly percentage change from the preceding month. If the actual number is higher than forecast its considered positive for the Dollar. Lower, of course, is a negative sign. In addition, traders look to see the trend of the figure. Is the figure down trending or up trending. Obviously, down trending is considered negative and up trending is positive for the Dollar.

Trader Take:

Auto sales can account for about 20% of the total retail sales. The auto addition can really throw the numbers off of reality, this is why the core retail sales provides a clearer picture of the true economic situation. This month it’s projecting a changed from the previous at 0.1% to 0.6%. The EUR/USD appears to be making the mother of all bases at the 1.3650 range. Is the pair setting up for another rout at the USD? It’s a tough call here. A surprise in this release could be the impetus to push the pair of its trading range. 

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.