AUDUSD TECHS: Support Remains Intact For Now

The Chicago Fed's Advance Retail Trade Summary (CARTS) released Wednesday currently estimates August retail sales ex-auto growth of 0.6% M/M (0.3% in real terms). This follows the weekly retail trade index falling 0.2% in the third week of August, after +0.1% the prior week. 

• The currently estimated inflation-adjusted 0.3% gain would be the same as July's (which saw a 0.3% nominal rise), and would mark the third consecutive sequential rise after two monthly contractions. July's CARTS estimate was below-consensus and ultimately on the low side at 0.1%.
• The final CARTS estimate will be out September 15, the day before the Census Bureau report.
• Reminder that CARTS "summarizes weekly data on retail transactions & foot traffic, gasoline sales, and consumer sentiment".

Thursday could prove eventful for Fed Board developments, with Governor nominee Miran testifying before the Senate banking committee at 1000ET, and a potential decision by the judge in Governor Cook's lawsuit against her "firing" by President Trump (a judgment had been anticipated to come as soon as Tuesday but the judge gave the Justice Department until Thursday to file another brief).

• We've fielded some client questions about whether the Trump administration could nominate a replacement for Gov Cook while she disputes her firing - the answer increasingly appears to be "no".
• Politico quotes Republican Senator Tillis as telling reporters today “I’m not going to consider anybody until that’s been adjudicated". That could effectively rule out a Cook replacement being named for now: Tillis is on the Senate banking committee on which the Republicans have a 13-11 majority, so without his support it is hard to see them confirming a new nominee.
• Per Politico, Tillis said: “I’m going to leave it to the courts to decide whether or not it’s legal... But if in fact it is to be for cause, it’s dubious whether or not — even if these events are as they’ve been described — [they’re] a basis for cause. If it’s a move to really kind of create a partisan divide in the Fed, then I’m against it on that basis....I have no interest in moves that would make the Fed really come under direct control of the executive branch."
• It's still unclear however whether Cook will participate in the September FOMC meeting that starts in just under 2 weeks' time.

Inflation: The August Beige Book notes "ten Districts characterized price growth as moderate or modest. The other two Districts described strong input price growth that outpaced moderate or modest selling price growth." The latter two appear to be New York ("Selling prices rose moderately, marking some acceleration since the previous period") and St Louis ("Prices have increased moderately since our previous report, but at a faster pace than in previous months").

• The report notes that "nearly all Districts noted tariff-related price increases, with contacts from many Districts reporting that tariffs were especially impactful on the prices of inputs".
• In terms of tariff passthrough, "while some firms reported passing through their entire cost increases to customers, some firms in nearly all Districts described at least some hesitancy in raising prices, citing customer price sensitivity, lack of pricing power, and fear of losing business. In some cases, as highlighted by Cleveland and Minneapolis, firms reported being under pressure to lower prices because of competition, despite facing increased input costs."
• As with the previous reports, there were expectations that price increases still lay ahead: "Most Districts reported that their firms were expecting price increases to continue in the months ahead, with three of those Districts noting that the pace of price increases was expected to rise further."