Will Retail Sales Affect the Risk Trade?

Right now, risk currencies aren't doing so well. However, with retail sales data just released, and showing an increase in August, there is some hope that things will improve. And with the current consolidation by the U.S. dollar, currencies like the sterling and euro could use some help in forex trading.

But, even with the good news, things may not improve just yet in the overall forex trading forecast for risk currencies. GFT's Boris Schlossberg reports on FX360 that a correction may actually be coming:

The more important number to consider will be the Retail Sales data ex-auto and ex-gasoline. That number may also be skewed by back to school spending, however if it fails to show any organic growth equities and risk FX could sell off in the aftermath. The consumer remains the weakest link in the recovery story not only in US but across the G-20 universe and if the Retail Sales data disappoint today it may finally trigger a correction in risk assets that many traders have been anticipating for weeks.

It is clear that the interpretation of the retail sales data, and other economic data today, will point to what forex traders and other investors think about how well the consumer is recovering from the recession. And that will influence the forex trading forecast for risk currencies.