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By eFXdata  —  Jun 18 - 04:30 PM

Synopsis:

ING estimates a current risk premium of 1.6% in EUR/USD due to concerns surrounding the upcoming French elections. This is a slight decrease from 2.4% at Friday's close, indicating that FX market concerns about French politics may have peaked temporarily. However, significant political risk remains, keeping the euro as a laggard in any USD-negative dynamics until the first round of the parliamentary vote on 30 June.

Key Points:

  1. Risk Premium in EUR/USD:

    • The short-term undervaluation in EUR/USD is currently estimated at 1.6%, down from 2.4%.
    • This suggests that FX market concerns about French politics may have reached a peak for now.
  2. Option Market Insights:

    • The EUR/USD 25-delta risk reversal has stabilized, but at -1.5, it remains the lowest since late 2022.
    • This indicates a persistent cautious sentiment in the options market regarding EUR/USD.
  3. Potential for Rebound:

    • If political risk premium scales back, there is substantial room for a rebound in EUR/USD.
    • However, such a rebound is unlikely before the first round of the French parliamentary elections on 30 June.
  4. EUR/USD Dynamics:

    • The euro is expected to remain a laggard in any USD-negative scenarios.
    • Political risks associated with the French elections are significant enough to keep the euro's recovery constrained.

Conclusion:

ING's analysis suggests that the risk premium in EUR/USD due to the French elections has temporarily peaked, with the potential for a rebound if political concerns ease. However, the euro is expected to remain under pressure until at least the first round of the French parliamentary elections on 30 June. The persistent cautious sentiment in the options market further supports this outlook, indicating that any significant recovery in EUR/USD is unlikely in the near term.

Source:
ING Research/Market Commentary
By Krishna K  —  Jun 18 - 10:00 PM
  • AUD/USD up 0.15% in quiet Asian markets, boosted by carry demand versus JPY

  • Higher-for-longer RBA rate stance lifts AUD/JPY to 11-yr high, underpins AUD

  • Steady RBA policy, low volatility in rates attractive for carry trades

  • RBA vigilant against inflation, discussed whether to raise rates Tuesday

  • Odds of RBA Dec rate cut fall to 35% from 62% before rate announcement

  • First RBA 25 bps rate cut not fully priced in now until May 2025

  • Australia-Japan yield differentials stay wide as BOJ vacillates on rate hike

  • AUD/JPY resistance at 105.43, high in 2013

  • AUD range in Asia 0.6656-0.66675; AUD/JPY range 104.98-105.22

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jun 18 - 07:45 PM
  • Steady after closing up 0.05% with the U.S. dollar down 0.05%

  • France's far-right seen leading in the first round of the parliament vote

  • Far-right leader Bardella needs strong majority to govern France effectively

  • The French election could trigger extreme Euro and interest rate volatility

  • Charts show mixed momentum studies, while 21-day Bollinger bands slip

  • 5, 10, & 21-day moving averages fall - signals maintain a negative setup

  • Targets a test of 1.0594/1.0601, 0.786% of Oct/Dec rise and the April low

  • Monday's 1.0686 low and Tuesday's 1.0761 high initial support, resistance

  • 1.0715 711mln, 1.0745 1.686BLN, and 1.0765 983mln close strikes for June 19

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jun 18 - 07:35 PM
  • AUD/USD buoyant in early Asia after rallying 0.65% Tuesday

  • Boosted by hawkish RBA, falling U.S. yields and rising Fed rate cut bets

  • RBA vigilant against inflation, discussed whether to raise rates Tuesday

  • Odds of RBA Dec rate cut fall to 41% from 62% before rate announcement

  • First RBA 25 bps rate cut not fully priced in now until May 2025

  • Tepid May U.S. retail sales data keep Fed rate cuts in play, boost AUD

  • Fed officials steer cautiously toward potential rate cuts

  • Broad 0.6580-0.6710 range persists; break of either side opens 0.6550/0.6750

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 18 - 03:00 PM

Synopsis:

Goldman Sachs anticipates that the Swiss National Bank (SNB) will maintain a close focus on FX language during its upcoming June meeting. While the rate decision remains uncertain, the balance sheet policy and broader European risk are expected to play a more significant role in influencing the Swiss Franc. Given recent comments by SNB President Thomas Jordan, there is potential for a reintroduction of a formal selling bias in FX language, emphasizing active foreign currency sales.

Key Points:

  1. FX Language:

    • The SNB's approach to FX language will be closely monitored.
    • There is a possibility of reintroducing a formal selling bias in FX language, focusing explicitly on selling foreign currency.
  2. Rate Decision:

    • The decision on interest rates remains a close call.
    • The balance sheet policy and broader European risks are considered more critical for the Franc's performance.
  3. Balance Sheet Policy:

    • The balance sheet policy is anticipated to be a key factor in supporting the Swiss Franc.
    • The prospect of only a limited cutting cycle is expected to influence SNB's policy decisions.
  4. Safe Haven Demand:

    • Renewed safe haven demand for the Swiss Franc is expected due to broader European risks.
    • The SNB's potential actions in the FX market could help bolster the Franc.
  5. Comments by President Jordan:

    • Recent remarks by SNB President Thomas Jordan suggest a potential shift in FX policy.
    • The explicit focus on selling foreign currency could be formally reintroduced in the FX language.

Conclusion:

Goldman Sachs expects the SNB to emphasize FX language and balance sheet policy during the June meeting. While the rate decision is uncertain, the reintroduction of a formal selling bias in FX language and a focus on selling foreign currency could support the Swiss Franc. The balance sheet policy and renewed safe haven demand due to broader European risks are likely to play a more significant role in shaping the SNB's approach.

Source:
Goldman Sachs Research/Market Commentary
By Burton Frierson  —  Jun 18 - 02:10 PM

The dollar was little changed against most majors, except for sharp losses versus the Australian dollar, as investors weighed evidence of a softening U.S. economy against political uncertainty in Europe, producing a mixed outlook across key currency pairs.

U.S.
retail sales grew just 0.1% in May, disappointing the Reuters consensus forecast for a 0.3% advance, while a downward revision to a 0.2% drop for April emphasized the softness in the data.
The control series rose 0.4% last month as expected, but April was revised down to show a drop of 0.5%.

U.S.
industrial production rose more than expected, alleviating some of the dollar weakness, but retail sales was the bigger catalyst of the session.

EUR/USD rose from near the day's low of 1.0710 following the retail sales headlines to a peak of 1.07615 during the U.S. morning before the lift subsided.
It remains below the 10-, 21-, 55- and 200-day moving averages following its slide from the June 4 high of 1.0916.

GBP/USD bounced off support at 1.2669 after the U.S. retail sales report as Treasury yields dipped.
The lows of the last three sessions -- 1.2669, 1.2660 and 1.2658 -- are providing support.
Resistance comes in at Tuesday's high of 1.2720 and falling 10-DMA at 1.2742.

Key events up ahead for sterling are Wednesday's UK CPI and Thursday's BoE meeting.

Falling Treasury yields after U.S. retail sales took USD/JPY lower, from Tuesday's high of 158.22 to 157.52 before returning to the 157.80s.
Resistance resides in the mid-158.20s, near Tuesday and Friday's highs.

Markets are wary of potential MoF intervention as the 160.00 level nears.
Lower Fed rate expectations and a diminishing U.S. yield advantage are weighing on USD/JPY.
Risks are still tipped to upside barring a concrete move by the BoJ and MoF, on the one hand, or Fed on the other.

In the wake of a hawkish hold form the RBA that come much as expected, AUD/USD capitalized on the soft U.S. yields that took hold following the U.S. retail sales report, though it remained trapped in its broad 0.6580-0.6710 range.

In a busy day for Fed speak, policymakers largely stuck to optimism that rates can gradually come down at some point but that more time is needed to observe data and gain confidence that inflation is coming down.

U.S.
Treasury yields fell roughly 5-6bp on the day, and the S&P 500 was up 0.27% in New York afternoon trade.

WTI rose 0.8%, copper advanced 0.93% and gold firmed 0.43%.

In afternoon trade: EUR/USD flat, USD/JPY +0.1%, GBP/USD -0.03%, AUD/USD +0.57%.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Jun 18 - 01:35 PM
  • 1.0718 hit on EBS in early NY after EUR/USD traded 1.07615 in Asia overnight

  • Buying ensued as yields US2YT=RR, US$ fell & spreads tightened US2DE2=RR

  • US May retail sales missed estimates, suggested consumers may be weakening

  • Riskier assets rallied; stocks ESv1, gold XAU= rallied, USD/CNH slid

  • EUR/USD pierced the daily cloud base, rallied to 1.07615 then pulled back

  • US$ selling abated which drove EUR/USD towards 1.0735 late in the day

  • EUR/USD was up +0.03% in NY's afternoon, daily doji candle formed

  • The doji and falling monthly RSIs may be signals which worry longs

  • Remarks from Fed's Kashkari, Barkin, Daly may impact risk Wednesday

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Jun 18 - 01:35 PM
  • GBP$ trades near flat at 1.2703 in NY afternoon; Tues range 1.2721-1.2669

  • Pre-RS dip to 1.2669 reversed as soft data, downside revisions sink yields

  • Sterling's post retail sales rise tempered ahead of UK CPI nL1N3IG0IU

  • Bulls wary ahead of UK CPI Wednesday, BoE decision/presser Thursday

  • Bevy of Fed speakers taking measured tack on rate cuts, inflation reduction

  • Despite soft RS data LSEG's IRPR rate cut odds in '24 not materially changed

  • Supt at Jun 14 low 1.2658, 100-DMA by 1.2640, daily cloud top 1.2596

  • 1.2596 also 50% of 1.2894-1.2299, close below risks protracted move lower

  • Res 1.2720 Tuesday high, 1.2743 falling 10-DMA, 1.2763 Jun 14 high

  • A downside surprise in UK CPI will pull forward BoE cut odds; GBP bearish

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 18 - 01:30 PM

Synopsis:

This week is crucial for UK markets, with significant events including the release of May's inflation figures and the Bank of England's (BoE) monetary policy meeting. Danske Bank expects the BoE to maintain the Bank Rate at 5.25%, aligning with consensus and market pricing, while also setting the stage for future rate cuts starting in August. The market reaction is expected to be muted, with potential upward movement in EUR/GBP due to the BoE's dovish tendencies.

Key Points:

  1. May Inflation Figures:

    • Scheduled for release on Wednesday morning.
    • Headline inflation is expected to drop to 2% year-on-year.
  2. Bank of England Monetary Policy Meeting:

    • Taking place on Thursday.
    • BoE is expected to keep the Bank Rate unchanged at 5.25%.
    • The decision aligns with consensus and current market expectations.
  3. Future Rate Cuts:

    • The BoE is likely to prime the market for an upcoming cutting cycle.
    • Danske Bank anticipates the first 25bp rate cut in August.
  4. Market Reaction:

    • Expected to be muted overall.
    • Balance of risk skewed towards a higher EUR/GBP, given the BoE's dovish stance.
  5. BoE Communication:

    • The BoE is expected to maintain its current communication strategy.
    • Focus on preparing the markets for future monetary policy easing.

Conclusion:

This week presents significant developments for UK markets with the release of inflation data and the BoE's monetary policy meeting. While Danske Bank anticipates no change in the Bank Rate, the focus will be on the BoE's communication and its preparation for future rate cuts starting in August. The market reaction is expected to be subdued, but the balance of risk suggests a potential rise in EUR/GBP due to the BoE's dovish inclination.

Source:
Credit Suisse Research/Market Commentary
By Justin Mcqueen  —  Jun 18 - 12:20 PM

USD/JPY traded modestly firmer during Tuesday’s session but stopped short of hitting its post-BoJ high at 158.26, with mixed signals emerging from U.S. data and risk sentiment.

Despite softer than expected U.S.
retail sales
data prompting a pullback through 158, dips remain shallow in the pair.
This will likely persist as long as U.S. stocks continue to print fresh record highs.

As a result of the drift higher in stocks, USD/JPY has resisted the gravitational pull from U.S. yields, which is somewhat of a concern for the dollar.
For USD/JPY, the direction of Treasury yields likely suggests that upside in the pair may be harder to come by going forward.

That said, unless equities take a turn lower with Treasury yields, the path of least resistance remains on the topside for USD/JPY, particularly as the VIX continues to bobble around the lows.

In any case, a better expression of playing yen upside is likely against the euro in the lead up to the first round of the French parliamentary elections on June 30.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 18 - 10:45 AM

Synopsis:

Credit Agricole has revised its forecast for the Federal Reserve's rate cuts, now projecting the first cut to occur in September instead of July. This adjustment maintains the overall forecast of 50 basis points of cuts by the end of the year, with a skip in November and another cut in December.

Key Points:

  1. Revised Timeline for Rate Cuts:

    • The first rate cut is now expected in September, pushed back from the previous July forecast.
    • The new schedule includes a pause in November, followed by another cut in December.
  2. Maintained Total Cuts for the Year:

    • Despite the shift in timing, the total projected cuts by year-end remain at 50 basis points.
    • This adjustment represents the first change in Credit Agricole's forecast since October of last year.
  3. Comparison with Market Expectations:

    • The revised forecast is a smaller shift compared to the market and other forecasters' expectations earlier this year.
    • In mid-January, the market was pricing in a full cut by March and a total of almost 170 basis points of easing at one point.

Conclusion:

Credit Agricole's updated forecast for the Federal Reserve's rate cuts now anticipates the first cut in September, with a follow-up cut in December, maintaining a total of 50 basis points of easing for the year. This revision highlights a more gradual approach compared to the market's earlier, more aggressive expectations.

Source:
Crédit Agricole Research/Market Commentary
By Richard Pace  —  Jun 18 - 09:50 AM
  • Big repricing of downside EUR/USD risk premium via options

  • Implied vol for EUR puts over calls on risk reversals to new long term highs

  • 1-month expiry 0.15 to 1.5, other expiry dates to 1-year above 1.5, too

  • Huge trading of outright downside strikes continues on Tuesday

  • 3-month expiry 1.0200 EUR put USD call paid 9.1 implied vol on 2-bio euros

  • Premium around 26 USD pips, break-even 1.0174

  • Market clearly short downside which boosted EUR put premiums/price surge

  • Price action reinforces the negative spit/positive volatility correllation

  • In other words - EUR/USD weakness will drive FXO implied volatility higher

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 18 - 09:35 AM

Synopsis:

The Reserve Bank of Australia's (RBA) recent policy meeting has modestly strengthened the Australian dollar, with the AUD/USD and AUD/NZD rates reaching intra-day highs. Despite acknowledging economic weaknesses, the RBA's cautious stance on future rate hikes has provided near-term support for the currency.

Key Points:

  1. AUD Strengthening Post-Meeting:

    • The Australian dollar saw modest gains following the RBA's policy meeting, with AUD/USD and AUD/NZD rates peaking at 0.6632 and 1.0834, respectively.
  2. Inflation and Policy Uncertainty:

    • The RBA noted that while inflation is easing, it remains high and is slowing more gradually than expected.
    • The central bank is uncertain about the interest rate path needed to bring inflation to target within a reasonable timeframe, leaving all options open.
  3. Economic Downside Risks:

    • The decision not to hike rates further was influenced by signs of weak economic momentum, including slow GDP growth, a rising unemployment rate, and slower wage growth.
  4. Market Expectations and RBA Outlook:

    • Despite the RBA's tough talk on potential future rate hikes, the market is less convinced, expecting the next policy move to be a rate cut later this year.
    • MUFG shares this view but acknowledges that the RBA could still tighten policy further, alongside the Bank of Japan, which could support the AUD.

Conclusion:

The RBA's latest policy meeting has provided near-term support for the Australian dollar, despite highlighting economic weaknesses and uncertainties in the inflation outlook. Market participants remain skeptical about further rate hikes, anticipating a potential rate cut later this year. However, the possibility of the RBA tightening policy further, along with a favorable global economic outlook, could continue to bolster the AUD.

Source:
MUFG Research/Market Commentary
By eFXdata  —  Jun 18 - 09:03 AM

Synopsis:

CIBC interprets the latest US retail sales data as supportive of their expectation for the Federal Reserve to cut rates in September. The lower-than-expected retail sales growth in May, along with downward revisions for April, signals a cooling consumer demand that aligns with the Fed's goal of rebalancing the economy.

Key Points:

  1. Retail Sales Data:

    • Total retail sales in May rose by only 0.1%, missing the expected 0.3% gain.
    • April's retail sales growth was revised down from -0.2% to -0.4%.
  2. Control Group Performance:

    • The control group, which contributes to non-auto core goods consumption in GDP, increased by 0.4% in May, slightly below the 0.5% expectation.
    • April's control group figure was revised down to -0.5% from an initial estimate of -0.3%.
  3. Consumer Spending Trends:

    • The data indicates that the strong consumer spending observed in the latter half of 2023 is tapering off.
    • This slowdown in consumer spending is a positive development for the Fed, suggesting that economic demand is moderating.
  4. Implications for Fed Policy:

    • The slower pace of consumer spending supports the view that the economy is cooling, aligning with the Fed's objectives for rebalancing.
    • CIBC maintains its expectation for the first Fed rate cut to occur in September, given the evidence of reduced demand pressure in the economy.

Conclusion:

The May retail sales data, with its lower-than-expected growth and downward revisions, provides further evidence of a cooling US economy. This aligns with the Federal Reserve's goal of rebalancing demand and supports CIBC's forecast for a Fed rate cut in September. The moderation in consumer spending is seen as a positive indicator for achieving the Fed's economic objectives.

Source:
CIBC Research/Market Commentary
By Justin Mcqueen  —  Jun 18 - 07:05 AM
  • GBP/USD -0.17%, pair remains boxed in range with UK CPI risk ahead

  • Traders hesitant to chase a breakout as CPI will have a big say on direction

  • August cut pricing = 41% implies good two-way risk for sterling

  • Though a soft print will likely have a larger impact amid build up of longs

  • Such outcome would open door to a test of the 200DMA (1.2553)

  • GBP/CHF lower can also be an expression to play a dovish BoE repricing

  • Bear target likely 1.1158-68 (200DMA/Apr swing low)

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jun 18 - 06:25 AM
  • Demand for Thursday expiry options that include UK CPI and BoE

  • Strikes mostly EUR call/GBP puts so can benefit from higher spot

  • Thursday 0.8465 strike EUR call/GBP put traded 8.0 implied volatility

  • Premium was 15 GBP pips - so break-even at 0.8480

  • Strikes expiring Thurs 0.8450 (450mln), 0.8475 (350mln) 0.8500 (671mln)

  • There's almost 1-billion euros at 0.8475 expiring on Fri - potential draw

  • Weak CPI signalling earlier/more BoE rate cuts can lift EUR/GBP near term

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Jun 18 - 05:35 AM

There is continued uncertainty over the direction of the euro.
However, the overall bias is on the downside amid political turmoil in Europe and the daily technical chart.

EUR/USD has stabilised somewhat this week after France's Marine Le Pen signalled she didn't intend to pursue extreme fiscal policies if her far right party gets into power, and that she isn't pushing for Emmanuel Macron's ouster.
However, spot is in danger of a bigger slump under the April 1.0602 low in coming sessions, especially as fourteen-day momentum remains negative.

While EUR/USD registered a close on Friday under 1.0722 Fibo, a 61.8% retrace of the 1.0602 to 1.0916 (April to June) EBS rise, it has closed back above it on Monday.
That is a possible bear-trap, set when a market breaks below a technical level but subsequently reverses, which is usually a bullish sign.

However, only a break and close back above the thinning daily cloud resistance that currently spans the 1.0747-91 region, would confirm a shift back to the upside.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jun 18 - 03:50 AM
  • FX option trade flows in USD/JPY show traders positioning for 160.00 retest

  • Buyers of JPY put/USD calls - outright and as spreads and with RKO triggers

  • Implied volatility falling amid higher spot and post BoJ risk paring

  • Benchmark 1-month now 8.0 vs 9.0 last week - new low since April

  • JPY call over put implied volatility premium on 1-month risk reversals 1.1

  • This downside strike risk premium was 1.75 before intervention on April 29

  • Market seemingly less concerned about renewed intervention this side of 160

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jun 18 - 02:35 AM
  • Cable hugs 1.2700 after S&P 500, Nasdaq hit record closing highs on Monday

  • GBP is risk-sensitive. Nikkei up 1% Tuesday (after 1.8% fall on Monday)

  • 1.2715 was Asia high. 1.2661 was Monday's low (1.2658 was 4-week low Friday)

  • US May retail sales data due 1230 GMT; up 0.2% MM forecast vs 0.0% in April

  • Retail sales miss could weigh on dollar, while a beat could boost it

  • UK May inflation data due Wednesday at 0600 GMT; CPI forecast at 2.0% YY

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jun 18 - 01:50 AM
  • FX Option strikes expire at 10-am New York/3-pm London on Tuesday June 18

  • EUR/USD: 1.0670-75 (2.8BLN), 1.0700 (1.4BLN), 1.0725-30 (1.6BLN)

  • 1.0750-60 (1.3BLN), 1.0775 (1BLN)

  • USD/CHF: 0.8850 (309M), 0.8915 (300M), 0.9000 (255M)

  • GBP/USD: 1.2675 (308M)

  • AUD/USD: 0.6585-0.6600 (1.3BLN), 0.6615 (319M), 0.6650 (453M), 0.6700 (837M)

  • NZD/USD: 0.6100 (377M)

  • USD/CAD: 1.3670-80 (550M), 1.3745-55 (793M), 1.3800 (519M)

  • USD/JPY: 156.50 (351M), 158.00 (488M)

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jun 18 - 01:00 AM
  • AUD/USD unchanged in Asia; RBA holds rates at 4.35% for 5th straight meeting

  • Reiterates that it won't rule anything in or out on policy

  • Says inflation above target & persistent, labour market remains tight

  • Notes that economic activity momentum has weakened, says GDP growth slow

  • Decision, accompanying language widely expected; AUD, rates mkt little moved

  • Futures now imply a 56% probability of Dec RBA rate cut from 62% earlier

  • First 25bps rate cut now only priced in for April 2025

  • AUD rallies capped by weak CNY, JPY; higher for longer RBA supports

  • Asia range 0.6621-0.6598; support 0.6580-85, resistance 0.6625-30, 0.6650

  • Broad 0.6580-0.6710 range persists; break of either side opens 0.6550/0.6750

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jun 17 - 11:45 PM
  • Off 0.1% at the base of a 1.0724-1.0741 range with the USD up 0.1%

  • Asian stocks are higher with Wall Street - European ESTX 50 +0.35%

  • ZEW economic sentiment leads EU data, then U.S. Core retail sales and IP

  • Charts show mixed momentum studies, while 21-day Bollinger bands expand

  • 5, 10, & 21-day moving averages fall - signals maintain a negative setup

  • Targets a test of 1.0594/1.0601, 0.786% of Oct/Dec rise and the April low

  • Monday's 1.0686 low and Friday's 1.0667 trend low are initial supports

  • Friday's 1.0745 high and 1.0814 21 DMA are the first resistances

  • 1.0725/30 1.559 BLN and 1.0750 798mln are the close strikes for June 18

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 17 - 04:30 PM

Synopsis:

Goldman Sachs projects a significant rebound in retail sales growth for May, with expectations of a +0.3% increase in headline retail sales and a +0.5% rise in core retail sales. This positive outlook is driven by a recovery in consumer spending following seasonal adjustments and increased credit card spending.

Key Points:

  1. Previous Month's Performance:

    • Core retail sales fell in April after a strong rise in March.
    • The decline led to concerns about a potential slowdown in consumer spending.
  2. Seasonal Adjustment Considerations:

    • The timing of Easter can make seasonal adjustments challenging, hence March and April's data are best viewed in combination.
    • Overall, Goldman Sachs maintains a solid outlook for consumer spending.
  3. May Retail Sales Forecast:

    • A forecasted rebound in retail sales for May with a +0.3% increase in headline sales and a +0.5% rise in core sales.
    • The rebound is supported by an uptick in credit card spending at retailers.
  4. Factors Influencing the Forecast:

    • Headline retail sales are expected to be softer than core sales due to lower gasoline prices, which are anticipated to offset higher auto sales.

Conclusion:

Goldman Sachs anticipates a positive turnaround in retail sales for May, driven by adjusted seasonal factors and increased consumer spending through credit cards. Despite a potential drag from lower gasoline prices, the overall outlook for consumer spending remains solid.

Source:
Goldman Sachs Research/Market Commentary
By Krishna K  —  Jun 17 - 09:30 PM
  • RBA rate decision, Statement on Monetary Policy at 0430 GMT/2.30 PM AEST

  • C.bank holds media conference on monetary policy decision at 0530 GMT

  • Expected to hold rates at 4.35% for 5th straight meeting

  • Likely to reiterate that it won't rule anything in or out on policy

  • Will retain mild hawkish bias as inflation sticky, job market tight

  • May not discuss raising rates as consumer demand weak, growth anemic

  • Futures price in only 15 bps of easing this year, 1st cut priced in for Apr

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
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