As anticipation builds around the US February Retail Sales report, the US Dollar (USD) is exhibiting signs of a modest recovery. Economists at BBH delve into the potential impact of the upcoming data on the USD.
Market observers are eyeing a rebound in Retail Sales, with expectations set at a 0.8% month-on-month (MoM) increase for February, following an unexpected 0.8% MoM decline in January. Of particular significance is the Control Group Retail Sales figure, excluding cars, gas, food services, and building materials, which directly factor into GDP calculations. Forecasts suggest a 0.4% rise in February, contrasting with the 0.4% decline recorded the previous month.
A robust showing in US consumer spending is poised to diminish expectations of Federal Reserve interest rate cuts within money markets. Such a scenario would lend further support to the USD, driving upside momentum. Conversely, evidence suggesting a weakening in consumer spending due to the burden of elevated interest rates and diminishing excess savings could prompt another downward correction in the USD.
