S&P 500, US dollar gain following strong retail sales data
Strong retail sales data propelled the S&P 500 above $5,500 and boosted the US dollar. Treasury futures fell as traders adjusted for higher interest rates. USD gained over 1% against JPY and CHF amid easing recession fears.
Key points
- US retail sales rose by 1.0% in July, the highest increase since January 2023
- S&P 500 rebounded, soaring by 1.0% and trading above $5,500 amid strong retail sales data
- US dollar surged as strong retail sales led to higher interest rate expectations and fewer projected rate cuts from the Fed
- USD rallied more than +1% against JPY and CHF, trading near 150.00 and 0.8800, respectively, due to waning flight-to-quality
US retail sales hit 1.0%, highest level since Jan 2023
Outperforming retail sales in July come at an uneasy time for US economic data, following lower-than-expected employment data earlier in the month and rising fears of a recession. Retail sales registered a 1.0% increase month-over-month, the highest since January 2023, smashing expectations of 0.3%. This strong performance has brought some optimism to the market, despite the broader economic concerns. Traders are closely watching these metrics for potential impacts on future monetary policy decisions.
S&P 500 soars 1.0%, trades through $5,500
US stock indices continue to rebound from their recent bout of volatility as economic data like retail sales restore confidence lost from July's 4.3% unemployment rate print—the highest since October 2021. The S&P 500 soared by 1.0% following the release, trading above $5,500 and continuing higher mid-morning. This rally is seen as a sign of renewed investor confidence in the market as they digest mixed economic signals.
US dollar surges on higher interest rates
US Treasury futures moved sharply lower following the strong retail sales data as traders price in higher interest rates and fewer rate cuts from the Fed now that recession fears seem to be waning. This increase in US rate projections is building demand for USD once again. As a result, the dollar has shown significant strength against other major currencies, driven by the expectation of sustained higher yields.
USD/JPY and USD/CHF price analysis
The dollar rallied more than +1% against both the yen and franc following July's retail sales data as the recent flight to quality in JPY and CHF seems to be losing momentum. USD/JPY and USD/CHF are now trading near 150.00 and 0.8800, respectively. Both traditional "safe-haven" currencies are now giving back after enjoying an outsized rally against the dollar following the spike in recession fears. 83% of USD/CHF traders at IG Group, which includes tastyfx, are holding long positions in the pair—anticipating further dollar strength.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.