Fundamental Report – March 13, 2013: Markets Look to US Retail Sales to Determine Risk Sentiment

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The US Dollar is trading with a slightly bid tone against the Euro so far this week but still finding some selling pressure against the Japanese Yen. The next main event from the fundamental side of things will be seen in the US Retail Sales report, which is expected to show a monthly increase in store sales of 0.5%. While this number is relatively weak from a long term perspective, an accurate forecast in this area would be a larger increase than what was seen during the previous month (0.1%).

Looking Ahead to the Australian Jobs Report

A strong number here would be particularly encouraging for market sentiment, given the excellent employment figures that were released last week (a massive 236,000 new jobs when only 163,000 were expected by analysts). Into the middle of the week, most asset markets are seen stalling but an encouraging data report today would likely re-ignite the strong buying that was seen through the market close last Friday. For the most part, data releases will be scant this week (with only a few regional exceptions in today’s Retail Sales and in Australia’s employment Data tomorrow), so it is not altogether surprising that we have seen price action slow as investors reassess the validity of the longer term trend direction. The Retail Sales data will be particularly important for traders focusing on the USD/JPY, as this is one of the best indicators of general market sentiment, and the pair will need additional impulses in order to continue with the strong price rally we have seen so far this year.

Looking ahead to tomorrow, the main data figure to watch will be the Australian monthly jobs report, which is expected to show an increase of 10,000 new jobs for the month (after the 10,400 job increase seen the previous month). The report will also show the latest Unemployment Rate data, and a majority of market analysts are expecting this rate to drop one tick to 5.4%. These figures will be critical for both short and long term traders focusing on the AUD/USD, as last week’s central bank meeting in Australia has changed some opinions with respect to when (or if) the RBA will actually decide to lower interest rates this year.

 

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