Global data today has been roundly disappointing with Chinese industrial production/retail sales soft, UK jobs missing estimates and the German ZEW also low. the market has been slow to react and a big reason is that US retail sales are still to come.
Here's a preview from BMO's fixed income team:
Tuesday’s retail sales data will help inform early projections for the consumption component of Q2 GDP and the extent to which averages gas prices reaching a five-month high during April may have weighed on household discretionary spending. The Committee has maintained a resilient consumer poses a threat to their efforts to ease price pressures, and evidence that demand is not abating may leave investors questioning whether rates are sufficiently restrictive despite a market that is ~85% confident the terminal rate has been achieved for the cycle. It is also worth mentioning within last week’s New York Fed consumer survey, median year-ahead household spending growth expectations dropped to the lowest level since September 2021. This is directionally consistent with the committee’s pursuit of demand destruction and, as the latest update on the state of household balance sheets, Tuesday’s consumption data will provide the latest information on any progress the Fed has made in reaching this objective.
The main spot to watch will be the control group, which is expected up 0.3% after a 0.3% decline last month.
At the same time as the US data, we'll get Canadian April CPI, which is expected to slow to 4.1% from 4.3%. That will make the turn of the hour a volatile one for USD/CAD traders.
If the data is neutral, I would expect a growth-negative bias to creep into the market as the earlier releases are digested. There's also a good setup for USD outperformance if retail sales are in-line.