Retail sales are one of the major economic indicators that Forex traders need to be aware of. The retail sales report attempts to measure the total projected retail sales of all the retail stores in a country to give a number of how much is being bought. In the United States the retail sales report tends to be released on or around the 13th of the month, and this released report lists and analyzes the nation’s consumer spending from the month before.
This report is important among Forex traders (not to mention other traders) because it is a timely indicator that gives a good sense of the general spending patterns of consumers – which is often a good indication of general belief on how the economy is doing and whether consumers are confident or not. Consumer confidence always has a huge influence on how the economy of a country is going to be, especially in the short term.
These reports can be used to predict the performance of other important lagging indicators used in technical analysis, as well as keeping focus on the immediate health of an economy. This makes this report very important for active Forex traders.
The retail sales report doesn’t simply concentrate on just large stores like Wal-Mart and Target, but also looks at small-town independent businesses and local franchises. This allows a much more accurate picture of how the over all economy is doing on both a local and national level. This accurate picture will be able to give you an in depth feel for how a nation’s economy might stack up compared to others.
Most importantly, because of how quickly this information is turned around, this is considered a timely indicator that can tell you how the nation’s economy is doing RIGHT NOW! That’s huge for a fluid market like the Forex.
Retail sales reports are known for causing sudden volatility in the stock market, but the report also affects the Forex market. When retail sales are high, especially unexpectedly high, you can expect to see a hike in a nation’s currency price, while an unexpected downturn could cause a sudden “sell” run on a nation’s currency, which would cause the price to fall.
The retail sales reports will almost always provide you some of the most up to date information on a nation’s economy, and remains absolutely necessary reading to any Forex trader looking to keep a solid fundamental base in their trading strategies. If you want to know how things are doing right now, this is the report to look for.