US Retail Sales: Is inflation affecting the US consumer?

Last week’s CPI for May was 8.6% YoY, the highest level since December 1981. Has the high level of inflation reached the point that American consumers are willing to spend less due to higher prices? The headline Retail Sales print for May was -0.3% MoM vs +0.2% MoM expected. Therefore, it appears inflation may be causing consumers a bit of concern. In addition , the April number was revised from +0.9% MoM down to +0.7% MoM, which makes May’s number even worse. The main culprit for the lower print was a decrease in new car and trucks. Excluding autos, the print was +0.5% MoM. However, the expectation was for +0.8% MoM. As with the headline print, the ex-autos number for April was revised down, from +0.6% MoM to +0.4% MoM. For good measure, the ex-gas/autos print was +0.1% MoM in May vs +0.8% MoM in April.

What are economic indicators?

USD/CAD had been trading in a range since mid-November 2021 between 1.2454 and 1.2965. On May 9^th, the pair broke briefly through the top of the range and made a high of 1.3077. By May 13^th, USD/CAD had pulled back within the range and formed a Head and Shoulders pattern. The target for a head and shoulders pattern is the height from the head to the neckline, added to the and breakdown point below the neckline. In this case, the target was near the bottom of the range, at 1.2450. Price came up a bit short of the target, reaching just below the 78.6% Fibonacci retracement from the spike low on April 5^th to the highs on May 12^th, near 1.2518. Since then, USD/CAD rose in dramatic fashion over the last 5 trading sessions to the top of the range, near 1.2975.

Source: Tradingview, Stone X

Trade USD/CAD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

On a 240-minute timeframe, interestingly, USD/CAD moved higher to the 78.6% Fibonacci retracement level from the highs of May 12^th to the lows of June 7^th, near 1.2960. If price is to continue higher, the next level of horizontal resistance is at 1.2995 (slightly above the top of the long-term range on the daily). Above there, price can move to the May 12^th highs at 1.3077, However, notice that the RSI is in overbought territory and turning lower, and indication that USD/CAD may be ready for a pullback. First support is a zone of support between 1.2866 and 1.2900. Below there, price can fall to the 50 Day Moving Average at 1.2750 (see daily), then horizontal support near 1.2686.

Source: Tradingview, Stone X

Is inflation affecting retail sales? It sure seems like it. Is a recession ahead? Possibly, but we’ll have to wait for more data to determine that. USD/CAD had been on a tear lately and has stalled its ascent near the 78.6% Fibonacci retracement level. The RSI is also pointing lower, in overbought territory, on the shorter timeframe. Watch for a pullback in the near-term.

Learn more about forex trading opportunities.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.