US: Retail sales to register more moderate gains - TDS

Following a strong January showing, analysts at TDS expect February retail sales to register more moderate gains.

Key Quotes

“TD expects a 0.2% increase in February, with small negative contributions from auto and gasoline station sales. Light weight vehicle sales were little changed at 17.5m units in February and gasoline prices fell on a seasonally adjusted basis. Outside of these categories, we expect a rebound in the online spending category to boost sales while warmer than normal temperatures bode well for building materials and food & drinking places. Following the weak print for real personal spending in January, soft gains indicated in February retail sales point to Q1 real PCE tracking near a 2% annualized pace vs 3.0% in Q4.”

“Foreign Exchange

We do not see much scope for implications on FX markets with the focus on a crucial Fed meeting later in the day. Moreover, our forecasts are broadly in line with consensus expectations but on the margin should be neutral to moderately supportive for the USD at best. Beyond this however, a surprise in either direction should be viewed as an opportunity to jockey for position ahead of the FOMC where we are biased for USDJPY and USDCAD to rally further.”