The U.S. Census Bureau will release the country's Retail Sales report on Friday. Market analysts expect headline Retail Sales to grow 0.5% monthly in July, following a slightly higher increase in June, indicating that consumption remains strong. Consumers appear to have flocked to shopping malls, responding to summer sales and seeking to avoid further price increases resulting from higher trade tariffs.

Consumer spending unexpectedly recovered in June after a 0.9% decline in May. Retail and food services grew 0.6%, totaling USD 720.1 billion in June, driven by the broad recovery. Excluding autos, sales of all other products increased 0.5% compared to the previous month.

This data release will likely reflect a weakening US dollar. Moderate consumer inflation figures seen earlier in the week have boosted investor confidence that the Federal Reserve will finally cut interest rates at its next meeting in September, fueling risk sentiment that has weighed on the US dollar.

The USD Index (DXY), which measures the dollar against a basket of six major currencies, has depreciated by about 2.3% so far in August, hitting a low below 98.00.

The market has almost fully priced in a September rate cut, and investors will be watching July's consumption figures for confirmation. A slight moderation in retail consumption, as expected, could be a "Goldilocks" reading, highlighting somewhat lower consumer spending without triggering recession fears. This would allow the central bank to ease monetary policy to support the weakening labor market. (alg)

Source: FXstreet