Understanding Retail Sales Data that Affects Forex Trading
Many forex traders utilize data and financial information in the trading they do.One of the economic data that is very influential on price movements is retail sales data. Information from retail sales is awaited by forex traders because this data includes indicators that have an impact on inflation rates and GDP.
Retail sales data is also a data that is highlighted by the actors in the market, due to the huge impact on the USD.
What is Retail Sales ?
Retail sales is an indicator that shows the amount of consumer spending in a time and this becomes an aspect that will drive the economic activity. Thus retail sales data will play a role to determine the economic growth that occurs.
Now let’s look at an example of a case in the United States, where about 70 percent of consumer spending comes from retail sales. As retail sales increase, this will increase GDP and the tendency for inflation. Things like this can happen because when the purchasing power of society increases, then the economy will continue to grow and the velocity of money will continue to be maintained.
Simple Process in Retail Sales
As retail sales data increases, it means there will be more factory products sold.When the product produced by many buyers, the income earned by the factory will increase. Increased factory revenues prompted companies to increase employee salaries in order to boost productivity and expand business.
The development shown above is what shows economic growth in a country.
Specifically, retail sales can be interpreted as a percentage of total change in retail sales figures.
Multiple Types of Retail Sales
The first type is Core Retail Sales, wherein the automotive sector is not included because the automotive sales are too volatile compared to other sectors.
Furthermore there is Retail Sales, where all sales sectors will be taken into account in this data including the automotive sector.
Durable Goods Consumers are those that specifically take into account the sale of durable goods. 3 months is used as a benchmark and a benchmark to determine the level of endurance goods.
Furthermore, there are Non-Durable Goods Consumers that take into account the purchasing power of consumers for goods with less than 3 months of endurance.
Retail Sales Data and Their Effects on Forex Trading
Retail sales have a pattern that is directly proportional to the level of economic growth, where increased retail sales will trigger price increases. Likewise, when data has weakened, it will reduce the value of the currency. Broadly speaking, the data released by retail sales will be the first indictor of economic growth.
When retail sales data is better than expected, then this will indicate an economic growth in a country. When many manufacturing products are absorbed by the market, the company’s revenue will increase, then the company will increase the salaries of its employees, expand its expansion, and open more job opportunities.This process is a sign of economic growth in a country.
Good economic growth will reflect the strength of consumer purchasing power and this will tend to increase inflation. As the economy increases, this will lead to a stronger currency exchange rate of a country. The inflation will also make the Central Bank raise the benchmark interest rate.
In the opposite case, retail sales data that declined and smaller than expected became an indication of a slowing economy. As this continues, this will cause the Central Bank to reduce interest rates and finally to liberate the exchange rate of a country’s currency.
Time Range for the Release of Retail Sales Reports in Some Countries
- Australia (AUD): Australian Bureau of Statistic between 30 to 35 days after the end of the period
- UK (GBP): Office for National Statistic between 15 to 21 days after the end of the period
- United States (USD): United States Cencus Bureau between 14 to 25 days after the end of the period
- Japan (JPY): Ministry of Economy, Trade, and Industry between 25 to 30 days after the end of the period
- European Union (EUR): Eurostat between 14 to 30 days after the end of the period
Benefits You Will Feel from Retail Sales Data
The benefit of retail sales data is that this data is released at the beginning of the month and you can compare the results released between the previous month and the newly elapsed month.
While some weaknesses found in retail sales data is that there are often revisions that occur and when revisions usually have a large value and data that is very volatile and difficult to predict the trends that are happening.
Retail sales or retail sales data is an economic report that became one of the important indicators that measure the current economic conditions. When this indicator experiences good growth, the economy will also experience improvement. Likewise when the indicator data deteriorates.
The main effect given to retail sales data on currency transactions is, as this data increases will make the value of the currency strengthened. When the data decreases, the value of the currency will also decrease.
Such information can we convey related to retail sales. We hope the information presented above can provide many benefits to all of you who have read it.