Retail sales and CPI up next

The Fed is desperate for some good US economic news and they get two chances at the bottom of the hour with June CPI and retail sales on the calendar.

The US dollar has struggled this year and it the worst-performing major but that could begin to change, or at least retrace, today.

2017 performance:

A big reason for the dollar weakness is that economic growth has been slower than expected. What's puzzling about the weak GDP numbers is that jobs and soft data (like surveys) have been very strong.

The Fed is confident that a turnaround is coming. Will it start today?

I'm not sure but I see risks as skewed towards a stronger dollar. If the data is weak, it will be brushed aside quickly. If it's strong, however, the market could get excited very quickly.

Watch both headline and core CPI.

  • Headline expected up 1.7% y/y
  • Ex food and energy also expected +1.7%

Even more important will be average earnings. There are no consensus estimates so the trend will be key.

  • Prior weekly earnings +0.5%
  • Prior hourly earnings +0.6%

Retail sales is also a key indicator for consumers. The control group is the line to watch and it's expected up 0.3%.