Dollar’s fall is very, very slow – SocGen

Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes USD outlook ahead of US CPI (Tuesday) and Retail Sales (Wednesday) data.

Weak Retail Sales would support the idea that the consumer’s pile of excess savings is getting run down

Tuesday’s US CPI data (we expect a steady core measure at 4.1% while the headline falls to 3.3%) and Wednesday‘s Retail Sales (which are likely to be soft) will attract attention. 

Weak Retail Sales would support the idea that the consumer’s pile of excess savings is getting run down and that as demand slows, the labour market will loosen up and the whole economy will slow down too. But Fed Chair Jerome Powell will warn about over-reacting and the market will be wary of over-reacting. I won’t though! A genuinely soft Retail Sales figure would reinforce my view that US yields, and the Dollar have now peaked. Unfortunately, all this caution ensures the Dollar’s fall is very, very slow.