Economists are expecting that US retail sales probably rose for a fourth consecutive month in July, showing the US economy is breaking free of the effects of higher taxes and budget cuts.
According to the median forecast of 64 economists surveyed by Bloomberg, retail sales climbed 0.3 per cent last month after a 0.4 per cent advance in June. The official data will be released on 13th August 8.30pm. In fact, other data may show gains in manufacturing and residential construction as well. Retail sales is an important figure which many traders look at because consumer spending today accounts for about 70 per cent of the US economy.
Even other Indexes which track consumer spending and sentiment are on the rise. The Standard & Poor’s GICS Consumer Discretionary Sector Index, which encompasses companies that tend to be the most sensitive to swings in the economy including AutoNation, climbed 5.9 per cent in the two months through 9th August. The S&P 500 Index was up 2.9 per cent over the same period. On 16th August, the Thomson Reuters/University of Michigan preliminary August consumer sentiment index may climb to a six-year high of 85.3 from a final July reading of 85.1. This will show that consumer confidence in the US is steadily rising.
Retail sales aside, other segments look to be on the upswing as well. Payrolls have increased an average of 192,000 a month this year through July compared with 182,750 in 2012, according to the Labor Department. The jobless rate in July fell to 7.4 per cent, the lowest since December 2008 and down from 7.8 per cent at the end of last year. Even automakers are enjoying their best year since 2007, with US sales on track to reach 15.8 million, according to Autodata Corp.
Singapore has been one of the beneficiaries of the improving US economy. Prime Minister Lee Hsien Loong has raised his forecast for economic growth from 1 to 3 per cent to a range of 2.5 per cent to 3.5 per cent this year. The economy has expanded 2 per cent in the first half of 2013, which is a marked improvement from the 1.3 per cent gross domestic product (GDP) for the whole of 2012, a pace that was the slowest in three years.
USA: Retail Sales m/m. Tuesday, 13th August, 8.30pm.
I expect figures to come in at 0.3 per cent (previous figure was 0.4 per cent).
EUR: Flash GDP q/q. Wednesday, 14th August, 5pm.
I expect figures to come in at 0.2 per cent, (previous figure was -0.2 per cent).
Long EUR/USD at 1.3340
On the H1 chart, EUR/USD is currently moving in a 80-pip range after trending upwards for 10 days. The pair has touched the 38.2 per cent Fibonacci Retracement level at a price of 1.3319. I expect the EUR/USD to continue its upward trend if the Flash GDP announced on Wednesday shows positive data.
We will go long once EUR/USD reaches a price of 1.3440. This would give us more certainty that the upward move will continue after pausing in a range. Our stop loss is placed 30 pips below the entry price at 1.3310. We will have two targets on this trade, exiting the first position at 1.3370 and the second position at 1.3400.
Entry Price = 1.3340
Stop Loss = 1.3310
1st Profit = 1.3370
2nd Profit = 1.3400