The highlight for investors during today’s session is the US retail sales update which will showcase how consumer spending trends evolved in the month of August.
So far retail spending activity has been robust, albeit a few short-lived hiccups, indicating that despite the Fed’s tightening efforts to constrict inflationary pressures, the US consumer remains resilient and continues to fuel the United States’ economic growth cycle.
According to expectations, the headline figure retail sales growth rate is seen easing moderately by analysts to the 0.2% level, down by two tenths of a percent in the month of August, whereas the core rate, which excludes automobile purchases, is expected to record a tenth of a precent rise to the 0.4%, up from last month’s 0.3% result.
Overall, August retail sales are expected to show growth but at a slower pace than July, with ongoing inflation and tariffs influencing consumer behaviour and spending patterns, which could be another data point leading faster the Federal Reserve towards rate reductions.
Markets are bracing for at least one 25bps rate cut at this week’s Fed policy decision, whereas a miniscule probability is attributed to a larger 50bps cut, since participants became increasingly convinced after a series of labour market cracks that the institution will have no other choice but to resume its loosening campaign and end its multi-month-hiatus.
In other news, the US Senate confirmed Stephen Miran, the chair of the Council of Economic Advisers, to become a member of the Federal Reserve Board of Governors, days ahead of the FOMC’s meeting, with his appointment raising concerns about the Fed’s independence given his political affiliation and close ties to the Trump administration.
At the same time, Fed board Governor Lisa Cook will keep her seat at the upcoming decision, since a federal court rejected Trump’s firing, over alleged mortgage fraud.
Technical Analysis
Gold Chart –Gold futures steamroll higher ahead of Fed’s policy decision
Resistance: 3700 (R1), 3750 (R2), 3800 (R3)
Support: 3615 (S1), 3550 (S2), 3500 (S3)
