US dollar gains amid safe haven demand; China data fuels fears

US dollar gains amid safe haven demand; China data fuels fears

KUWAIT: The latest month–on-month retail sales reading came at 0.7 percent, significantly higher than the previous reading of 0.3 percent, and well above the forecasted 0.4 percent. The core retail sales index also soared to 1.0 percent from 0.2 percent previously, with both readings at their highest levels since January. This indicates that high wages from the ever so tight labor market have kept demand high despite the vicious interest rate hikes by the Fed.

The data showed that the main driver behind the increase was online sales, which soared by 1.9 percent. Retail sales are highly valuable indicators for potential GDP figures, and this unexpected rise leads markets to believe that GDP figures will come in substantially higher. The current narrative is that the US will be able to achieve a “soft landing,” and such data adds to that narrative as inflation is cooling in the US, accompanied by a robust labor market.

FOMC meeting minutes

During the Federal Open Market Committee meeting, Federal Reserve officials expressed their concerns over the path of inflation. Officials said that an additional rate hike might be necessary in the future, unless current economic conditions change. The two-day meeting resulted in a quarter-percentage point rate hike