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Thursday, November 13, 2008
ForexYard indicator report
by: Forexyard


Be Prepared! U.S. Retail Sales Tomorrow At 13:30 GMT

We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that the U.S. Retail Sales figures are expected tomorrow, November 14th, at 13:30 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general, but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. Retail Sales, please read below.


What is the U.S. Retail Sales Indicator?

U.S. Retail Sales is a leading economic indicator used to measure the percentage change in the total value of sales at the retail level during the previous month. It is a leading indicator of economic health because the report reflects a wide variety of consumer spending, such as restaurants, consumer goods, and autos. Consumer sentiment can also be derived from this survey in order to gauge the outlook on the U.S. economy. This report is the earliest indicator of consumer spending released by the U.S. Census Bureau. An additional report released at the same time is Core Retail Sales which does not include sales of automobiles. When used together, the reports paint a picture of the state of the U.S. Consumer. This survey predominantly helps to analyze market trends and to determine the direction of the U.S. economy.


If the Survey Comes Inline with Market Forecasts

Expectations for this month are suggesting that the U.S. Retail Sales will fall by -2.0% in September, reflecting a -0.8% decrease from October. Such a result could demonstrate a shrinking economy and a lower consumer sentiment in the U.S. The U.S. economy is currently facing a financial crisis, triggered by a downturn in the housing market, a lack of credit, and reluctance by banks to lend. This may adversely affect the report because the sale of new automobiles account for roughly 20% of the report's total. U.S. auto sales are predominantly financed by bank loans. The recent drop in equity markets may add to a negative outlook for the American consumer which could reduce their spending on non-essential items. A decreasing figure will most likely be interpreted by investors that the American people are reducing their purchases in a time of financial uncertainty. Such a scenario will probably move the greenback and the EUR/USD might rise to test the 1.2900 level.


If the Survey Will Surprise With Bullishness

When the actual figure is higher than forecasted, traders are likely to see the USD appreciate against its currency pairs and crosses. The volatile two trading weeks we have just experienced concluded with significant strength for the USD. Investors are now following the opportunity to make profits out of their open positions on the USD, and a better-than-expected figure on the Retail Sales survey, such as -0.4% instead of -2.0% will possibly provide them that exact opportunity. Such a figure is good because it will ease some concerns regarding a contracting U.S. economy. If U.S. citizens are increasing their purchases, this may reduce pressure in a tough market and push the USD higher. With the recent decrease in gas prices, consumers may see an increase in disposable income, reflecting in additional purchases. In this turn of events, the EUR/USD might correct itself down to reach as low as the 1.2000 level.

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