US Retail Sales in the United States were unchanged at $735 billion in December, according to the US Census Bureau. This followed a 0.6% increase in November and came in below the expected 0.4% rise.
Year over year, Retail Sales increased 2.4% in December. Total sales from October 2025 through December 2025 rose 3.0% (±0.4%) compared with the same period a year earlier.
Dollar Reaction To Retail Sales
After the release, the US Dollar slipped slightly. The USD Index was down 0.05% on the day, at 96.83 at the time of reporting.
The flat December 2025 retail sales figure suggests the US consumer may be losing momentum after a strong run. The slowdown, following a firmer November, may reflect smaller savings buffers and more cautious spending as the first quarter of 2026 begins. This reading also challenges the idea that economic strength is holding up as well as it did through most of last year.
This report may also raise expectations that the Federal Reserve could cut interest rates sooner than previously expected. Markets may start assigning a higher chance of a policy shift before summer, which some traders express through options on Fed Funds futures. With the Fed’s 2024 pivot away from tightening still in mind, weaker consumer demand adds to the case for a more dovish outlook.
In this setting, protective put options on consumer discretionary and retail-focused ETFs may look more attractive as hedges. US credit card balances have recently moved above a record $1.1 trillion, and soft retail data suggests consumers may struggle to keep spending at the same pace using debt. As a result, implied volatility in these sectors—and in the broader market through the VIX—could rise from current low levels.
Positioning For A Weaker Dollar
The Dollar’s small drop after the data may be the start of a broader move if rate-cut expectations continue to build. Traders can position for potential Dollar weakness in derivatives markets by favoring call options on currencies such as the Euro or Japanese Yen. If Fed policy shifts, dollar-denominated assets may become less attractive, encouraging capital to move into other markets.
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