The Dollar direction today will be determined by the US consumer. Economists at ING analyze Greenback’s outlook ahead of January Retail Sales data.

DXY to stay bid in a 104.50-105.00 range

We and the market are looking for some softening in the January retail sales figures today, but the consensus of a 0.2% month-on-month increase in the retail sales control group (from 0.8% MoM in December) hardly signals cause for alarm.

Barring a huge downside surprise in retail sales or a surge in initial jobless claims (to support the anecdotal news of rising US layoffs) we do not think the Dollar has to come too much lower. Subdued cross-market volatility is keeping interest in the carry trade alive and also benefitting the high-yielding Dollar.