US consumers are proving to be true shopping maniacs, Commerzbank Head of FX and commodity research Ulrich Leuchtmann notes.
Retail sales rise by 1% vs 0.4% expected
“In July, retail sales rose by 1%, as the Census Bureau reported yesterday. Analysts had expected a meager 0.4%. The subcomponents of particular interest were also significantly stronger than analysts had expected. And because it is now a truism that the US consumer is ‘the engine of the US economy’, the retail sales figures at least helped to dispel some of the weakness of the USD in recent days.”
“We do not believe that the US economy is sliding into a recession either. In our view, therefore, the market reaction was not wrong. However, I would like to point out that yesterday's figures were not proof of one or the other view of the US economy. In a hypothetical coming recession, the US labor market would certainly only suffer damage with a time lag. And it is only then that the US consumer typically notices.”
“Do you remember Tom & Jerry? In the cartoon, you often see Tom the cat running over a cliff and continuing to run in the air for a moment before crashing all the harder. If the US economy were to slide into recession in the near future, it seems plausible to me that US retail sales would show a similar behavior. In short, yesterday's strong figure is not a watertight proof of a robust US economy in the near future. But it is a necessary condition for this view.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD recovers further to 0.6000 despite escalating US-China trade war
AUD/USD is building on its recovery from its lowest level since March 2020, retesting 0.6000 in Wednesday's Asian trading. The pair's upside appears elusive as officials confirmed that the US will proceed with a sweeping 104% tariff on Chinese imports starting this Wednesday.
USD/JPY: Japanese Yen strengthens further as recession fears boost safe-haven demand
The Japanese Yen continues to benefit from US tariffs-inspired global flight to safety. Hopes for a US-Japan trade deal further underpin the JPY amid sustained USD selling. The divergent BoJ-Fed expectations support prospects for deeper USD/JPY losses.
Gold price jumps back above $3,000 amid trade war threat to global growth
Gold price regains positive traction following previous day's failed attempt to surpass the $3,022-3,023 hurdle and retakes the $3,000 psychological mark during the Asian session on Wednesday.
Bitcoin, Ethereum and Ripple target $73,000 BTC, $1,300 ETH, and $1.30 XRP
Bitcoin price hovers around $76,200 on Wednesday after falling 3.59% the previous day. Ethereum and Ripple followed BTC’s footsteps and continued their downward trend.
The Fed is looking at a hefty price level
We are still in thrall to tariffs, the faux-macro “data” driving markets. The WSJ editorial board advised other countries to take their tariffs to zero so that Trump’s “reciprocal” tariffs will have to be zero, too. Cute, but no cigar.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.