US Data Flow Continues

Following a hotter-than-forecast CPI report earlier in the week, traders are today bracing for the next slew of US data. Retail sales will be the key release to watch, along with Empire Fed and Philly Fed manufacturing index readings and unemployment claims. Given the data we saw on Tuesday the subsequent rally in USD, the Dollar is primed for further upside here if we see additional data beats today.

Retail Sales on Watch

On the numbers front, the market is looking for core retail sales to slip to 0.2% from 0.4% prior with headline due to slip to -0.2% from 0.6%. In light of these fairly dim forecasts, there is a very low bar today for an upside surprise. If data does come in above forecasts, particularly if the headline reading avoids falling into negative territory, this should help spur the USD rally on near-term. Similarly with unemployment claims, on the back of the recent strong US jobs data we’ve seen, if data undershoots today this should again feed into USD positivity.

Rate Cut Timing in Focus

With traders grappling to get a view on when the Fed is likely to cut this year, incoming high-end data like this is likely to take on greater focus. The Fed has effectively ruled out a March rate cut, so these data sets are now being viewed with an eye on possible May/June cuts. The stronger data stays and the longer it stays robust, the further out the market will be forced to price in a Fed cut, keeping USD supported near-term. However, should data start to weaken, this should see USD under pressure as traders bring forward their rate-cut projections.

Technical Views

USDCHF

The recent rally has seen the pair breaking out above the .8717 level with price trading up to test the .8907 level and the bear trend line from 2022 highs. This area is holding as resistance for now. However, with momentum studies bullish, the focus remains on a further push higher while price holds above the .8717 level keeping .9079 as the next target.