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AUD/USD stabilizes after taking a tumble, Fed nextThe Australian dollar has steadied on Wednesday after sliding 1.4% a day earlier. AUD/USD is up 0.19%, trading at 0.6489 at the time of writing in the North American session. Australian dollar slides after soft retail sales Retail sales in Australia fell 0.4% m/m in March, following a downwardly revised 0.2% gain in February and shy of the market estimate of 0.2%. The decrease in sales was felt across all industries, as consumers held tight to the purse strings. On an annualized basis, retail sales grew by just 0.8% in March, the lowest level since August 2021. The Australian dollar responded with sharp losses to the disappointing retail sales release. China posted soft PMIs which also weighed on the Aussie. The manufacturing PMI eased to 50.4 in April, down from 50.8 and just above the market estimate of 50.3. The services PMI fell to 51.2, compared to 53.0 in March and below the market estimate of 52.2. The data indicates that manufacturing and services are showing little growth, another sign of the slowdown in China, which is Australia’s largest export market. Weaker economic activity in China means less demand for Australian exports, which is weighing on the Australian dollar. Will Powell make a hawkish pivot? The Federal Reserve meets later today, with little doubt that it will maintain interest rates for a sixth straight time. The target range for the benchmark rate of 5.25% to 5.5% hasn’t changed since July and the Fed has shown that it is willing to prolong its “higher for longer” stance as long as is needed. Fed Chair Powell is expected to have a hawkish message for the market, which would likely provide the US dollar with a boost. AUD/USD Technical AUD/USD is putting pressure on resistance at 0.6504. Above, there is resistance at 0.6537 0.6439 and 0.6406 are the next support levels
by OANDA
GBP/USD eyes retail salesThe British pound is having a quiet week and that trend has continued on Thursday . In the North American session, GBP/USD is trading at 1.2450, down 0.04%. The UK release retail sales for March on Friday. The market forecast for March is 0.7% y/y after a decline of 0.4% y/y in February. Today’s British Retail Consortium retail sales index jumped 3.5% y/y in March, raising hopes that the official retail sales release will also improve. The driver behind the strong gain was spending on food, as the Easter holidays fell in late March. Retail sales have shown sharp swings in 2024, with adverse weather keeping shoppers at home and weighing on consumer spending. The weather will improve in the coming months and the Paris Olympics and Taylor Swift concerts are expected to lead to an increase in consumer spending and demand. Inflation in the UK declined to 3.2% y/y in March, down from 3.4% in February but higher than the market estimate of 3.1%. The inflation rate fell to its lowest since September 2021 but the BoE remains cautious and is yet to signal that rate cuts are coming, especially as core inflation has proven to be sticky and is more than double the 2% target. In the US, the Federal Reserve is none too happy about inflation accelerating in February and March. Fed Chair Powell said this week that higher-than-expected inflation would delay rate cuts and there are doubts whether the Fed will raise rates at all this year. The markets have slashed expectations for rate cuts due to the robust US economy and rising inflation. GBP/USD tested support at 1.2451 earlier. Below, there is support at 1.2421 There is resistance at 1.2486 and 1.2516
by OANDA
S&P Bearish after Retail Sales.. Israel/Iran conflict abroad? 🤨The S&P futures is quite weak after strong USD retail sales data. This move opposes a rational reaction to data that came out better than forecasted by a good margin. The market is pulling back and continuing the bearish momentum from the previous week. This may have to do with the conflict between Israel and Iran, this retracement back down. Oil is pushing up and Gold is pushing up late in the NY session here on Monday April 15th.. Money is being shifted to those Risk-On assets rather than stock indices such as S&P
CME_MINI:ES1!Short
by ShrewdCatfx
Pound drops to 1-month low after flat retail salesThe British pound has extended its losses on Friday. In the European session, GBP/USD is trading at 1.2600, down 0.45%. Earlier, the pound fell as low as 1.2584, its lowest level since March 20. UK retail sales were flat in February, after a revised 3.6% gain (m/m) in January. This was better than the market estimate of -0.3%. On an annualized basis, retail sales fell by 0.4%, erasing most of the 0.5% gain in January. Britain’s weather was unusually wet in February which dampened retail trade. The Bank of England maintained the cash rate at 5.25% at Wednesday’s meeting. The pause was widely expected and marked the sixth straight time that the BoE has kept rates unchanged. Perhaps the most significant development at the meeting was the Monetary Policy Committee vote. The MPC voted 8-1 to keep rates unchanged, with one member voting for a quarter-point cut. This was the first time in the current tightening cycle that no members voted for a hike - at the previous meeting, two members voted to raise rates by a quarter-point. The markets pounced on the vote as evidence of a dovish shift in the Bank’s stance and the British pound sank 1% on Wednesday, its worst one-day performance since October 2023. It looks like rates have peaked, but when can we expect the BoE to start cutting rates? Governor Bailey said after the meeting that inflation is not “yet at the point where we can cut interest rates, but things are moving in the right direction”. The markets are looking at an initial cut in June, with an outside possibility in May. GBP/USD is testing support at 1.2605. Below, there is support at 1.2552 There is resistance at 1.2704 and 1.2757
by OANDA
Aussie calm ahead of RBA decisionThe Australian dollar is showing little movement on Monday. In the North American session, AUD/USD is trading at 0.6655, down 0.07%. The Reserve Bank of Australia wraps up a two-day meeting on Tuesday and is widely expected to maintain the cash rate at 4.35%. The RBA last raised rates in November 2023 and rates have likely peaked. There isn’t much suspense ahead of tomorrow’s meeting Economic growth has been hampered by elevated interest rates and the unemployment rate has been moving higher. This essentially precludes a rate hike. As for a cut in rates, the RBA is not in any rush, as inflation is falling but the current clip of 4.1%, it is more than double the 2% target. The RBA hasn’t signaled it is planning to cut rates and has maintained a rate hike bias, although barring a jump in inflation, it’s very unlikely that we’ll see another rate hike. The markets are looking at an initial rate cut sometime this year. Investors will be looking for hints at the meeting about future rate policy and the rate statement and Governor Bullock’s press conference could provide some insights. Any signals of a removal of its tightening bias could send the Australian dollar lower. China, Australia’s largest trading partner, started the week with mixed data. Industrial production sparked with a gain of 7% y/y in January-February combined, its highest level in two years. This followed a 6.8% gain in December and easily beat the market forecast of 5%. Retail sales eased to 5.5% y/y in January-February, down from 7.4% in December but above the market estimate of 5.2%. There is resistance at 0.6584 and 0.6615 0.6528 and 0.6497 are providing support
by OANDA
NZ dollar dips after hot US Producer Price IndexThe New Zealand dollar has lost ground on Thursday. In the North American session, NZD/USD is trading at 0.6136, down 0.33%. On Friday, New Zealand releases the Manufacturing PMI. It was a busy day in the US, and this writer expected that retail sales would be the highlight of the day. In the end, it was the Producer Price Index which stole the show and gave the US dollar a boost after a stronger-than-expected performance. PPI for February surprised with a gain of 0.6% m/m, up sharply from 0.3% in January and the market estimate of 0.3%. This was the highest rate since August 2023 and the primary drivers of the upswing were increases in the price of goods and energy. On an annualized basis, PPI jumped 1.6%, up from a revised 0.9% in January The Federal Reserve is unlikely to get worked up from the headline reading, as core PPI eased to 0.3% m/m, down from 0.5% in January but higher than the market estimate of 0.2%. On an annualized basis, core CPI remained steady at 2%, just above the market estimate of 1.9%. Retail sales rebounded in February with a gain of 0.6% m/m, following a revised 1.1% decline in January but shy of the market estimate of 0.8%. Retail sales rose 1.5% y/y, after a zero reading in January. New Zealand will wrap up the week with Manufacturing PMI. The manufacturing sector has struggled and has been mired in negative territory for eleven straight months. Still, there was some improvement in January, as the PMI rose from 43.1 to 47.3, its highest level since June 2023. The upswing is expected to continue in February, with a forecast of 48.1. NZD/USD is testing support at 0.6154. Below, there is support at 0.6092 There is resistance at 0.6240 and 0.6302
by OANDA
Aussie edges higher despite business confidence declineThe Australian dollar remains close to the 0.66 line, where it has been for most of the week. In the North American session, AUD/USD is trading at 0.6620, up 0.21%. The business sector is not feeling very confident about the near-term outlook of the Australian economy. The NAB Business Confidence index dipped to zero in February, down from one in January but above the forecast of -1. The NAB report noted that retail confidence remains deeply negative. There was better news from the NAB Business Conditions index, which rose to 10 in February, up from 7 in January. By industry, manufacturing showed improvement but retail and construction weakened. Australia’s economy has been limping along and consumers are still feeling the squeeze of the cost-of-living crisis and high mortgage payments as the Reserve Bank of Australia is yet to lower elevated interest rate levels. The RBA has raised rates only once since June 2023 and hasn’t ruled out rate hikes, although the markets have priced in rate cuts for later this year. The RBA is unlikely to consider lowering rates until inflation falls lower. In January, CPI rose 3.4% y/y, still well above the RBA’s target band of 2-3%. The next meeting is on March 18th and the RBA is widely expected to maintain the cash rate of 4.35%. Thursday will be busy in the US, with the release of retail sales, the producer price index and unemployment claims. Retail sales is often a market-mover and will be closely watched. The markets are expecting a strong rebound in February, with an estimate of 0.8% m/m. This follows a 0.8% decline in January, which was a 10-month low. There is resistance at 0.6702 and 0.6780 0.6590 and 0.6512 are providing support
by OANDA
1
USD/JPY slips after US inflation surpriseThe Japanese yen has looked sharp lately but is considerably lower on Tuesday. In the North American session, USD/JPY is trading at 147.75, up 0.55%. The yen has rallied for five straight days, gaining 2.4% during that time. The US inflation rate crept higher in February. Headline CPI climbed 3.2% y/y, up from 3.1% in January and above the market estimate of 3.1%. On a monthly basis, CPI ticked higher to 0.4%, matching the market estimate and above the January gain of 0.3%. The increase in inflation was mainly due to energy costs, such as gasoline, falling less than expected. Core CPI, which excludes food and energy and is considered a more reliable gauge of inflation trends, ticked lower to 3.8% year-on-year in February, lower than the 3.9% gain in January but above the market estimate of 3.7%. Monthly, core CPI remained steady at 0.4%, above the market estimate of 0.3%. The US dollar responded to the inflation report with sharp swings against the major currencies. The markets have lowered rate cut expectations, as the Fed will be less inclined to lower rates if inflation is moving higher. The Fed is virtually guaranteed to pause at the March meeting and the probability of a June cut has fallen to 66%, compared to 90% just one month ago. The US releases retail sales for February on Wednesday and an unexpected reading could cause further volatility for the US dollar. Retail sales fell to 0.6% y/y in January, compared to a sizzling 5.3% gain in December. The market estimate for February stands at 1%. USD/JPY has pushed above resistance at 147.25 and 147.55, and is testing resistance at 147.93 146.87 and 146.57 are providing support
by OANDA
Macro Monday 36~U.S. Johnson Redbook Index (U.S Retail Sales)Macro Monday 36 The Redbook Index – U.S Physical Retail Store Sales (Released Tomorrow Tuesday 4th March 2024) This Johnson Redbook Index is very useful at providing the most current insights into consumer spending habits in the U.S. It is released every week covering the prior Mon – Sun consumer spend period in physical outlets around the U.S. The index is compiled by Johnson Redbook Service by surveying a sample of 9000 retailers, and tracks year-over-year changes in sales of stores that have been opened for at least one year. The Redbook Index historically tracks sales information from physical stores (Brick and Mortar Stores). Their website describes that they monitor "retail sales" and "same-store sales" which typically refers to physical locations, however some stores also now have an additional online presence, thus in recent years efforts have been made to incorporate some of the online sales data into the index, however this is a secondary and marginal. The Chart The Redbook Index provides the YoY percentage increase or decrease of USD in retail sales in the United States. It is released every week covering the prior Mon – Sun spend period giving a real time read on current consumer spending It being a YoY data release means the percentage change in the Redbook Index is typically measured by comparing the current week's retail sales to those of the same week in the previous year. This calculation is expressed as a percentage to show the increase or decrease in sales over that time period. Example: If retail sales for the current week are $110,000 and sales for the same week last year were $100,000, the percentage change would be * 100, resulting in a 10% increase. The chart above illustrates the following: ▫️ The average % from 2005 to 2024 is 3.59% (black line in middle). We shall use this as our average midline barometer of retail sales. ▫️ Moderate levels of retail sales appear to fluctuate between +6% and -0.1% (white area in the middle). ▫️ We have an Exuberance Zone (Green) for when retail sales were over extended to the upside and a Recessionary Zone (Red) which was penetrated during the last two recessions. ▫️ You can see that in the mid 2000's we bounced off the Recessionary -0.1% zone three times as the index also made a series of lower highs (see arrow). This could be perceived as waning or struggling retail spending ahead of the crash. At present we have a series of lower highs and we have bounced off the Recessionary Level (-0.1%) once, if we see continued lower highs and more bounces from the red zone, this could be a concerning repeating pattern. You will be able to press play on my TradingView page at any stage over coming months to see where this index has moved on this chart. Lets see how this index performs over coming weeks and months. PUKA
ECONOMICS:USRI
by PukaCharts
New Zealand dollar rises to five-week high, retail sales nextThe New Zealand dollar continues to gain ground and has extended its gains for a seventh straight day. In the North American session, NZD/USD is trading at 0.6187, up 0.12%. The New Zealand dollar last had a losing daily session on February 13 and has jumped 2.1% since then. New Zealand consumer spending has been weak and more bad news is expected on Friday, when retail sales for the fourth quarter will be released. Retail sales slipped 3.4% y/y in Q3 and the markets are bracing for another sharp decline of 3.6%. On a quarterly basis, retail sales haven’t shown a gain since Q3 of 2022 and the market estimate stands at 0.4%. The Reserve Bank of New Zealand will be keeping a close eye on the release, which is the last tier-1 event ahead of the policy meeting on February 28th. The minutes of the Fed’s January meeting didn’t contain any surprises. Fed members remained concerned about lowering interest rates too early and questioned “how long a restrictive monetary policy stance would need to be maintained”.  In other words, the “higher for longer” stance will remain in place for now. The most important consequence of this policy is that a March cut is off the table, with only a 5% likelihood, according to the CME’s FedWatch tool. The Fed’s uneasiness about lowering rates too early was reiterated by Fed Governor Michelle Bowman on Wednesday. Bowman said that the current economic climate was not conducive to a rate cut. Bowman has been hawkish on inflation and said last month that she would consider raising rates if inflation stalled or reversed and moved higher. NZD/USD tested resistance at 0.6211 earlier. Above, there is resistance at 0.6270 0.6168 and 0.6109 are providing support
by OANDA
GBP/USD yawns as UK retail sales soarThe British pound has edged lower on Friday. In the European session, GBP/USD is trading at 1.2578, down 0.17%. UK retail sales were more than impressive, surging 3.4% m/m in January. This crushed the market estimate of 1.5% and followed a 3.3% decline in December. The reading was the largest monthly gain since April 2021. The sharp gain was driven by increased sales of food and fuel. On an annualized basis, retail sales rebounded with a 0.7% gain, compared to a 2.4% decline in December and well above the market estimate of -1.4%. Traders can be forgiven for scratching their head after the latest retail sales report, which points to consumers spending with gusto. Just a day earlier, the markets were digesting the news that the UK economy had entered a recession late in 2024, after recording back-to-back quarters of negative growth. GDP fell 0.3% in the fourth quarter and 0.1% in the third quarter. What gives? The answer could well be that the UK economy, although hurting, may be turning a corner. The sharp rise in interest rates has cooled down the economy and lowered inflation dramatically, but this effect appears to be fading fast. The “R” word (recession) may be making headlines but it is a shallow recession and the economy could quickly return to growth mode with some decent economic data. The Bank of England meets on March 21th and will try to make sense of where the UK economy is headed. The BoE has kept rates unchanged since August and there is pressure on the central bank to provide some relief to households and businesses and lower rates. At the same time, inflation remains sticky and the BoE is determined to stamp out high inflation and bring it closer to the 2% target before it lowers rates. GBP/USD is testing support at 1.2597. Below, there is support at 1.2550 There is resistance at 1.2676 and 1.2723
by OANDA
EUR/USD steady after soft German industrial productionEUR/USD has posted slight gains on Wednesday. In the North American session, the euro is trading at 1.0773, up 0.19%. This week's German data has analysts scratching their heads. Industrial production, released today, declined 1.6% m/m in December, compared to a downwardly revised -0.2% in November and worse than the market estimate of -0.4%. It was the ninth decline in ten months. Just a day earlier, factory orders surprised with a massive gain in December of 8.9% m/m, compared to the downwardly revised 0% reading which was also the market estimate. This marked the strongest monthly gain since June 2020 as foreign and domestic orders were close to double-digit growth. Manufacturing has been in the doldrums in the eurozone's largest economy, but the red-hot factory orders report provides hope that better days lie ahead. Germany's GDP declined by 0.3% q/q in the fourth quarter, as the economy has been hampered by sticky inflation, high energy prices and weak demand for German exports. The eurozone's largest economy could tip into a technical recession, defined as two consecutive quarters of negative growth, if first quarter GDP declines as well. The eurozone is also grappling with a weak economy and retail sales fell 1.1% m/m in December, after a revised 0.3% gain in January and below the market estimate of -1%. This was the sharpest decline in a year, as consumers have been hammered by high inflation and steep borrowing costs, resulting in consumers holding the purse strings more tightly. The economic picture in Europe is grim but the European Central Bank is still hesitant to embrace rate cuts, as policy makers have voiced concern that inflation could still show a comeback if the ECB cuts rates too early. The ECB will have plenty of time to digest key economic data, with the next meeting on March 7. EUR/USD is putting pressure on support at 1.0746. Below, there is support at 1.0704 There is resistance at 1.0822 and 1.0864
by OANDA
AUD/USD eyes retail salesThe Australian dollar is in positive territory on Monday after an uneventful week. In the European session, AUD/USD is trading at 0.6603, up o.41%. The markets are braced for a soft retail sales report on Tuesday, with December's consensus estimate standing at -1.0%. The November report sparkled with a 2% gain, the strongest level since November 2021. The strong gain was driven by Black Friday sales and other discounts and likely came at the expense of the December reading with consumers doing their Christmas shopping early. There could be a surprise to the upside in the retail sales report if consumers took advantage of Boxing Day sales in late December. The Reserve Bank of Australia meets next on February 6 and has repeatedly said that upcoming rate decisions will be data-dependent. This makes Wednesday's quarterly inflation report a critical release that will have a significant impact on the central bank's rate path. In the US, inflation continues to ease while economic growth remains solid, which is the recipe that the Fed hopes will continue. The US economy expanded by 3.3% in the fourth quarter, blowing past the consensus estimate of 2.0%. On Friday, the Fed's preferred inflation gauge, the PCE Price Index, rose 0.2% m/m in December, compared to 0.1% in November. On an annual basis, the index remained steady at 2.6%. The Core PCE Index eased to 2.9%, down from 3.2% in November.  The Fed is in no rush to raise rates, and market fever over a March cut have fallen dramatically. The markets have slashed the odds of a quarter-point cut in March to 48%, down sharply from 72% a month ago, according to CME's FedWatch tool. AUD/USD is testing resistance at 0.6583. There is weak resistance at 0.6613 There is support at 0.6544 and 0.6514
by OANDA
GBP/USD dips as retail sales slideThe British pound has weakened slightly on Friday. In the European session, GBP/USD is trading at 1.2682, down 0.18%. The markets were expecting a letdown from December retail sales after a strong November reading, but nobody was expecting a multi-year drop. Yet that's what happened, as retail sales plunged 3.2% m/m, the lowest level since January 2021. Considering the sharp drop, the British pound's reaction has been muted. In November, retail sales jumped a revised 1.4%, as shoppers flocked to department stores to take advantage of Black Friday sales and other discounts. This meant that much of the Christmas shopping took place in November. The massive drop of 3.2% crushed the consensus estimate of -0.5%. There is more to this story than Black Friday sales. The weak December reading reflected a UK consumer who is pessimistic about the economy and is being relentlessly squeezed by high inflation and elevated borrowing costs. December retail sales were brutal but the struggles faced by consumers are nothing new - retail sales fell by 2.8% in 2023, the lowest level since 2018. The sharp drop in retail sales will have a negative impact on December GDP, which could mean that GDP for the fourth quarter is negative. If that is the case, the UK will technically be in a recession, with two consecutive quarters of negative growth. Even if the UK manages to avoid a recession, growth will be flat. The Bank of England has kept rates unchanged for three straight times and meets on February 1. The sharp drop in retail sales supports the BoE considering a rate cut, but December inflation rose unexpectedly from 3.9% to 4.0%, and the BoE will be hesitant to chop rates before inflation is closer to the 2% target. GBP/USD is testing support at 1.2689. Next, there is support at 1.2625 There is resistance at 1.2738 and 1.2802
by OANDA
GBP/USD eyes UK retail salesThe British pound has edged lower on Thursday. In the European session, GBP/USD is trading at 1.2655, down 0.20%. What goes up must come down. That has the markets fretting ahead of the UK retail sales report on Friday. Retail sales growth was brisk in November, with an impressive gain of 1.3% m/m. This followed zero growth in October and marked the strongest gain since April 2022. The problem with the strong November release was that consumers were enticed to spend big due to Black Friday sales in late November. This is expected to dampen December retail sales, with many shoppers taking advantage of the discounted prices and attending to their Christmas shopping a few weeks early. The market estimate for December retail sales stands at -0.5%. The Bank of England will be keeping a close look at the retail sales report, as it digests this week's inflation data with an eye to the next policy meeting on February 1. Inflation in December rose unexpectedly, climbing from 3.9% to 4.0%. The BoE has tried to dampen market expectations of up to six rate cuts this year, with Governor Bailey sticking to a script of "higher for longer". The BoE won't be entertaining rate cuts until it is convinced that inflation is closer to the 2% target and key economic releases point to an improving economy. The unexpected rise in inflation did not support talk of a rate cut, and all eyes are now on Friday's retail sales report. GBP/USD tested support at 1.2656 earlier. Next, there is support at 1.2616 There is resistance at 1.2715 and 1.2755
by OANDA
Gold price bounces off, downside remains bets easeHere is what you need to know on Thursday, January 18: Technical Analysis: Gold price finds a temporary support near $2,000 Gold price attempts a firm-footing near psychological support at $2,000 amid a nominal decline in the US Dollar Index. The near-term demand for the precious metal has turned bearish as it has slipped below the 50-period Exponential Moving Average (EMA), which trades around $2,017. The higher-high-higher-low formation in the Gold price is over and market participants could utilize pullbacks for building fresh shorts. The 14-period Relative Strength Index (RSI) has dropped to near 40.00. If the RSI fails to sustain above 40.00 levels, a bearish momentum will get triggered. •Gold price discovers bets near $2,000 but remains on backfoot amid easing Fed rate cut hopes. •Stubborn US inflation and robust Retail Sales data favour a maintenance of hawkish interest rate stance. •Market participants will focus on Fed Bostic’s commentary ahead. Gold price (XAU/USD) has executed a short-term recovery move in the midst of a persistent downtrend. Gold price printed a fresh monthly low near the psychological support of $2,000 on Wednesday, then bounced. Yet despite the rebound, the precious metal remains on the backfoot as investors continue to worry about when the Federal Reserve (Fed) will start its long awaited rate-cut cycle. The hopes of an early rate-cut decision from the Fed are easing as the last leg of inflationary pressures in the United States is turning out significantly more stubborn than previously thought, due to robust consumer spending and steady labor market conditions. Amid an absence of front-line economic indicators, market participants are expected to shift focus towards the first monetary policy meeting of the Fed, which is scheduled for January 31. The Fed is widely anticipated to keep interest rates unchanged in the range of 5.25-5.50%. Investors will keenly focus on how the Fed proposes to make three rate cuts of 25 basis points (bps) each in 2024, as projected in the December monetary policy meeting. Daily Digest Market Movers: Gold price finds an interim support as US Dollar corrects •Gold price discovers an intermediate support near the psychological $2,000 level after an intense sell-off. •The near-term demand is still downbeat as uncertainty about an interest rate cut from the Federal Reserve in March has deepened. •Trades have pared bets supporting a rate cut in March due to resilience in the US economy. •Bets supporting an interest rate cut of 25-basis points (bps) have increased slightly to 61% but are still below the 75% recorded last week, as per the CME Fedwatch tool. •Market expectations for early cuts from the Fed have been pushed back as price pressures in the US economy remained stubborn and consumer spending grew strongly in December. •Upbeat economic indicators have provided room to Fed policymakers to maintain a restrictive monetary policy stance for a longer period than that anticipated by market participants before their release. •This week, Fed Governor Christopher Waller said the central bank should not rush taking interest rates down as more evidence is needed to ensure that price pressures are returning to 2% in a sustainable manner. •Christopher Waller advised that the Fed should reduce interest rates “carefully and methodically”, considering resilience in the US economy. •Meanwhile, the US Dollar Index (DXY) has rebounded after a gradual correction to near 103.20, supported by risk-off market sentiment. 10-year US Treasury yields are maintaining a firm-footing above 4%. •Later the day, investors will focus on the weekly jobless claims for the week ending December 12 and commentary from Federal Reserve of Atlanta Bank President Raphael Bostic. •Bostic is expected to maintain a hawkish argument considering stubbornly higher price pressures. •On Monday, Fed’s Bostic commented that progress in inflation declining towards 2% could slow if policymakers cut interest rates soon.
OANDA:XAUUSDShort
by sniper_2022
1
Australian dollar falls despite solid retail salesThe Australian dollar is in negative territory on Tuesday. In the North American session, AUD/USD is trading at 0.6685, down 0.51%. Australia's retail sales sparkled in November but the strong rebound wasn't reflected in the Australian dollar. Retail sales climbed 2.0% m/m in November, blowing past the estimate of 1.2% and recovering from a revised 0.4% decline in October. This was the highest reading since November 2021 as consumers came out and took advantage of Black Friday sales in late November. The boost in November sales could come at the expense of December sales, however, as consumers may have brought forward their Christmas shopping. Consumer confidence has improved on expectations that interest rates have peaked. Last week's ANZ consumer confidence index indicated that consumer confidence was at its highest level in a year and homeowners are also feeling optimistic as house prices have been rising. Australia will release the November inflation report on Wednesday, with expectations that inflation fell to 4.4%, down from 4.9% in October. The markets have priced in the first RBA rate cut in June but that could be brought forward if inflation falls below the estimate. The US will release the December inflation report on Wednesday as well, which could mean a volatile day for the Australian dollar. With the Federal Reserve on board for rate cuts this year, Fedspeak is being carefully monitored as investors search for hints as to the timing of a first rate cut. The markets have priced in an initial rate cut in March, but had to trim the odds after Friday's nonfarm payroll report was stronger than expected. Atlanta Fed President Bostic said on Monday that he was comfortable with a restrictive stance while inflation continues to move down toward the 2% target. AUD/USD tested resistance at 0.6732 earlier. Above, there is resistance at 0.6824 There is support at 0.6625 and 0.6533
by OANDA
GBP/USD shrugs after mixed UK dataThe British pound is drifting on Friday. In the European session, GBP/USD is trading at 1.2701, up 0.08%. UK retail sales jumped 1.3% in November m/m, bouncing back from 0% in October and beating the consensus estimate of 0.4%. This was the sharpest pace of growth since January and the increase was felt in all sub-sectors. Yearly, retail sales edged up 0.1%, after a downwardly revised decline of 2.5% in October and above the market consensus of -1.3%. The GDP report was less cheery, as second-estimate GDP for Q3 came in at -0.1%, compared to 0% in the preliminary estimate. This has raised concerns that the weak UK economy could tip into a recession, as negative growth in the fourth quarter would officially be considered a technical recession. GDP for the second quarter was revised downwards to no growth, compared to the initial estimate of 0.2%. The Bank of England will have to decide what to do with this mixed bag of data. The weak GDP could put pressure on the BoE to cut interest rates, but the sharp rebound in retail sales supports the central bank continuing its 'higher for longer' stance. The BoE has maintained the cash rate at 5.25% for three consecutive times. In the US, Federal Reserve members have been pushing back this week against market expectations for rate cuts next year. The markets have priced in up to six cuts in 2024, but the Fed members have said that the markets are getting ahead of themselves and Atlanta Fed President Raphael Bostic said he expected two rate cuts in the second half of 2024. On Friday, the Fed will get a look at the PCE Price Index, the central bank's preferred inflation indicator. The headline and core readings are expected to remain unchanged in November, at 0.2% and 0%, respectively. GBP/USD is putting pressure on resistance at 1.2720. The next resistance line is 1.2750 1.2636 and 1.2582 are providing support
by OANDA
Australian dollar extends gains, retail sales nextThe Australian dollar has extended its gains at the start of the week. In the European session, AUD/USD is trading at 0.6603, up 0.28%. The Aussie has posted an impressive streak, rising 3.8% against the greenback since November 14th. Australia releases retail sales for October on Tuesday. The consensus estimate stands at a negligible 0.1%, compared to a strong 0.9% gain in September. The sharp gain, which indicated resilience in consumer spending, provided support for the RBA to raise rates at the November meeting. If retail sales misses the estimate, it could sour sentiment towards the Aussie and send the currency lower. RBA Governor Michele Bullock will speak at an event in Hong Kong on Tuesday and investors will be looking for hints about what the RBA is planning at its meeting on December 5th. Changes, big changes are coming to the Reserve Bank of Australia. The Australian government announced it would introduce legislation to overhaul the central bank. This follows an independent review which called for sweeping changes at the RBA. There has been much criticism of the RBA for its pledge not to raise rates before 2024, only to embark on a tightening campaign which has raised the cash rate to 4.35%. The new Governor, Michele Bullock, has said she is favour of the changes. Last week, Bullock said on Tuesday that inflation has peaked and that the upside risk to inflation was domestic and demand-driven. Bullock noted that inflation had dropped from 8.0% to 5.5% in less than a year, but it would take much longer for inflation to drop that amount again and fall to 3%. The RBA's target range is 2%-3%. The RBA remains hawkish and raised rates earlier this month after holding rates for four straight times. AUD/USD is putting pressure on resistance at 0.6618. Above, there is resistance at 0.6650 0.6559 and 0.6526 are providing support
by OANDA
NZD/USD rises ahead of retail salesThe New Zealand dollar is in positive territory on Thursday. Early in the North American session, NZD/USD is trading at 0.6042, up 0.34%. Retail sales are a key gauge of consumer spending and the New Zealand consumer has been holding tightly to the purse strings. In the second quarter, retail sales fell 1% q/q, with most retail industries showing lower sales volumes. This marked a third consecutive losing quarter. The markets are bracing for another decline for Q3, with a consensus estimate of -0.8%. The soft retail sales data isn't really surprising as consumers are being squeezed by high inflation and elevated borrowing costs. The decrease in household purchasing power has meant a decline in spending. High interest rates are still filtering through the economy, which could further dampen consumer spending in the fourth quarter. The Reserve Bank of New Zealand has put a pause on rates for three straight times, which has naturally raised speculation that the central bank has completed its tightening cycle, which has brought the cash rate to 5.5%. Inflation in the third quarter eased from 6.0% to 5.6% y/y in the third quarter and this decline means that there is a strong likelihood that the RBNZ will hold rates at the November 27th meeting. US markets are closed for the Thanksgiving holiday, which means we're unlikely to see much movement today with the US dollar. That could change on Friday, with the release of US manufacturing and services PMIs. The consensus estimates for November stand at 49.8 for manufacturing (Oct: 50.0) and 50.4 for services (Oct. 49.8). If either of the PMIs miss expectations, that could translate into volatility from the US dollar. NZD/USD Technical NZD/USD is putting pressure on resistance at 0.6076. The resistance line 0.6161 There is support at 0.5996 and 0.5885
by OANDA
XAP: Consumer Spending Will be the First Shoe to DropCME: S&P Consumer Staples Select Sector Index Futures ( CME_MINI:XAP1! ) Last week, new government data showed further evidence of declining U.S. inflation rates. • On November 14th, the Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) was unchanged in October, down from 0.6% in August and 0.4% in September. The headline CPI is now 3.2%, down from 3.7%, on an annualized basis. • The Core CPI, which excludes food and energy, rose 0.2%, after rising 0.3% each in the previous two months. It is now 4.0%, down from 4.1%, on a 12-month basis. • On November 15th, the BLS reported that the U.S. Producer Price Index fell 0.5% in October, after advancing 0.4% in September. This decline is the largest since a 1.2% drop in April 2020. On an annualized basis, the PPI index rose 1.3%. • On November 16th, the BLS reported that U.S. import prices declined 0.8% in October, after a 0.4% rise in September. On an annualized basis, import prices declined 2.0%. • Prices for U.S. exports fell 1.1% in October, following a 0.5% rise the previous month. On an annualized basis, export prices declined 4.9%. Falling inflation rates are welcoming news. But it will be naïve to think that prices on store shelves are dropping. The harsh reality is that prices continue to rise, but at slower paces. CPI for All Urban Consumers (CPI-U) is 307.7 in October 2023, up from 298.0 in October 2022, and 252.9 in October 2018. The overall price level for all U.S. goods and services increased a modest 3.2% from the prior-year level. However, the cumulative price increase in the last five years reaches 21.7%. CPI Index for Food is 325.7 in October 2023, up 13.4% year-over-year, and up a whopping 36.0% in 5 years (from 239.5 in October 2018). Consumer spending has been holding up well so far, supported by a solid jobs market. However, this is starting to change. Earlier this month, the BLS reported October job growth at 150K, down sharply from 297K in September and 324K in October 2022. U.S. consumers are struggling under record levels of debt: • Total Household Debt: $17.3 trillion • Auto Loans: $1.6 trillion • Credit Card Debt: $1.1 trillion • The worst part: Interest payments on $1.6 trillion of student loans restarted last month Their financial conditions are worsened by rising interest rates: • Credit Card: 25% • Used Cars: 14% • New Cars: 10% If the U.S. economy enters a soft landing, consumer spending will dwindle due to higher unemployment and higher debt load. Even if the Fed is successful in driving inflation down to 2%, current spending level is not substantiable with the already high prices. The Retail Sector Underperformed the Overall U.S. Market The stock market is already showing the warning sign: The S&P 500 gained 17.7% year-to-date as of Friday, while the S&P Consumer Staples Select Sector Index declined 7.2%. The Consumer Staples sector consists of companies that provide goods and services that people use on a daily basis, like food, clothing, or other personal products. The S&P sector index currently consists of 38 companies. Retailers from Walmart, Target, Dollar General, Bath Body Works to McDonald’s all underperformed the S&P index this year. Last Thursday, Walmart reported Q3 earnings that exceeded Wall Street expectations. However, it struck a cautious tone with its Q4 outlook after seeing consumer spending weaken. Investors got spooked and the company’s shares slid more than 8%. Trading with Consumer Staples Index Futures In my opinion, U.S. retailers face strong headwinds this Holiday season. If sales could not hold up, stock prices could collapse. Unlike the Big Tech companies where investor sentiment alone could push prices higher, retailer stocks stick closer to the ground, where same-store sales and profit margins matter. The strong headwinds faced by the U.S retailers stem from potential decline in consumer spending. My rationale behind a negative view on consumer spending: • While living costs surge, consumers ration their purchases. This could mean downgrading from premium brands to store brands or holding off big-ticket items. • Higher monthly payments in mortgage, car loan, credit card bill, etc. reduce the discretionary income available for other spending. • Higher interest rates cause payments against floating-rate loans to skyrocket. When the credit limit is maxed out, the spending stop. • The cutdown in spending would speed up once unemployment rises. If a trader holds the view that consumer spending will decline, he could express it with a short position in CME Group’s E-Mini S&P Consumer Staples Select Sector Index Futures (XAP). XAP has a notional value of $100 x index value. At Friday closing price of 700.10, each December contract (XAPZ3) is worth $70,010. The minimum margins are $2,750 per contract. The upcoming “Black Friday” (November 24th) and “Cyber Monday” (November 27th) could be the make-or-break moments for retailers. Sector stocks could sharply rise or fall, as soon as sales data is released publicly. Hypothetically, if the trader is correct and XAP index falls 5% at 665, his short XAP position would have a theoretical return of $3,500 per contract (=35 X $100). The trader would lose money if the S&P continues to rise higher. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:XAP1!Short
by JimHuangChicago
1
Black Friday Buzz for AMZNThe Giant of e-commerce and AWS for small businesses, which now has AI integrated, is moving up in anticipation of a strong Black Friday for $NASDAQ:AMZN. The new CEO who took over form Jeff Bezos is doing a good job. As the CEO of the AWS division, he did an amazing job building that division of AMZN. Outstanding CEOs make a company great. CEOs are more important than most investors realize. Weekly Chart shows that AMZN is about 40 points from its all-time high, so plenty of opportunity for it to move up further from here. The Blue lines indicate levels where Dark Pool buy zones and Pro traders moved in most heavily. These are now strong support levels for the stock.
NASDAQ:AMZNLong
by MarthaStokesCMT-TechniTrader