US retail sales beat expectations in September on higher gasoline prices
In September, US retail sales rose unexpectedly, spurred by elevated gasoline prices. While this indicates resilient consumer behavior in the fuel sector, the moderate growth in other spending categories could suggest an underlying weakness that limits the sustainability of such trends. This is crucial as markets assess the likelihood of ongoing robust consumer spending momentum and its implications for inflation and monetary policy.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The reported retail sales support a more optimistic stance from firms like JPMorgan, which is consistent with expectations for continued strength from consumer spending in inflationary environments.
How firms align
JPMorgan's perspective aligns with this upbeat retail sales report, suggesting a potential upward revision in their forecasts. Meanwhile, BofA stands contrary, holding onto more pessimistic views that consider rising costs adversely affecting overall spending.
What the data shows
Recent revisions indicate a cautious stance across several firms. Despite September’s results, forecasts with regards to sustained consumer spending will be essential to watch closely as analysts weigh market reactions to inflationary pressures and potential rate adjustments. Insights from our analysis on consumer behavior trends can be referenced in /research/consumer-spending-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Retail sales growth indicates immediate resilience but bears watching.
- 02Gas price impact is significant; traders should monitor fuel trends.
- 03Moderate spending growth could pressure forecasts; risk lines around 1.065.
- 04Overall consumer sentiment will be critical for future policy direction.
Market implications
As we look ahead, key levels to watch include support around 1.065 for the EUR/USD, particularly amid upcoming inflation data releases. These readings will inform expectations for consumer spending and potential policy shifts from the Fed, aligning closely with our consensus number.
Risks to this view
Should inflation readings unexpectedly surge or consumer sentiment plummet, the current outlook could be invalidated. A drastic reassessment of economic stability could lead to significant market corrections and affect the EUR/USD trajectory.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.55
Sources & References
How we cover this story