The United States Dollar had an incredibly rough time in the market on Friday, and many believe that we’re going to see more declines. The reason for the fall is a relatively simple one. United States economic data missed its mark, leading to the concerns. Today, we’ll talk about the mixed retail data that was released out of the United States, why it caused the USD to take a dive, and what binary options traders should be watching for ahead.
US Retail Sales Lead To Mixed Emotion
As mentioned above, on Friday, the United States retail sales numbers were released by the Commerce Department. At first glance, the numbers looked great. During the month of April, retail sales increased by 0.4% excluding automobiles, gasoline, building materials and food services. That seems like great news, especially considering that in the month of March, retail sales edged up by only 0.1%. So, the growth in April looks promising. In fact, it looks so promising that Chris Rupkey, chief economist at MUFG Union Bank in New York had the following to say…
“The economy picked it up a notch from the slow start earlier this year, but the inflation fires are not burning brightly and this will keep the Fed on just a gradual pace for interest rate hikes later this year…”
Once again, the sales numbers sound great. However, the reality is that they actually missed their mark. In fact, during the month of April, economists expected that retail sales would increase by 0.6%. So, investors were left with mixed emotions. Sure, they knew that things were getting better, but they also knew that overall, expectations were missed!
Why This Was So Bad For The USD
At the end of the day, a currency can only be as strong as the economy it represents. So, any time questions are raised with regard to the US economy, we can expect to see declines in the USD. With the numbers missing their mark on the retail sales side of the coin, well, concerns came up and investors sent the USD downward. However, in this case, it goes even deeper than that.
You see, the Federal Reserve is expected to increase its interest rate any time now. As a result, that expectation has already been priced into the market. However, investors were hoping that the Fed would take a more aggressive approach at increasing interest rates. Unfortunately however, with key economic statistics not hitting their mark, the Federal Reserve simply won’t be able to move any faster on interest rates than they had already planned.
What Binary Options Traders Should Be Watching For Ahead
Moving forward, there’s no doubt in my mind that the USD is going to create opportunities for binary options traders. However, if you want to take advantage of these opportunities, you’ll need to keep a close eye on the news. In particular, continue to watch United States economic news very closely. In the week ahead, there’s plenty to watch for. On Tuesday, reports on Housing Starts and Industrial Production will be released. This will be followed up on Thursday by the Jobless Claims report and on Friday, James Bullard, CEO of the Federal Reserve Bank of St. Louis will offer a statement. Any of these stories could prove to be catalysts for the USD.
What Do You Think?