A big beat for US Retail Sales, lifted the USD, Treasury Yields and global stock markets, with a raft of “soft landing” scenarios swirling and even talk of a “no landing”, a situation where inflation cools quickly, the economy grows steadily and unemployment remains low without having a knock-on effect for inflation. A real disparity in views now emerging. Goldman Sachs cut the chance of a US recession in the next 12 months to 25%, from 35%; US 2yr/10yr yield curve at -87bp as the 10yr hits a 7-week high. Overnight: Japan reported it’s largest ever trade deficit at $174 billion as imports surged due to high energy costs with exports unable to compensate. AUD lower after a slump in jobs (-11.5k vs +20k) & unemployment up (3.7% from 3.5%).
- FX – USD Index tested into 104.00 for a 28-day high. Back to 103.65 now. EUR tested the weekly low at 1.0670 before recovering 1.0700, JPY breached 134.00 (new 28-day high) & tardes at 133.86 now. Sterling declined from 1.2175 to once again bounce from below 1.2000 to trade at 1.2050 now. Nicola Sturgeon the First Minister of Scotland announced a shock resignation, that will likely strike a blow for Scottish independence and increase the chances of the Labour Party at next years general election.
- Stocks – The US markets rose into close after a weak open. (+0.11% to +0.92%) Movers – #ABNB +13.35% & COIN +17.5%, OXY & PXD both shed over -5.2%. US500 0.28% (11.47) 4147, holding the key 4100. US500 FUTS 4161 now.
- Commodities – USOil – Futures dropped to $77.20, 5-day lows, yesterday after a very large inventories build of 16.3m barrels vs. 2.4m barrels last week. Prices have recovered to $79.20 today. Gold – tested the support level at $1830 yesterday before recovering to $1840.
- Cryptocurrencies – BTC – Surged over +10% yesterday from $22.0k lows, to breach the key $24k resistance area and test to 24.9k highs.
Today – US Building Permits/Housing Starts, Philly Fed, PPI, Weekly Claims. Speeches from Fed’s Bullard, Cook & Mester, ECB’s Lane, Panetta & de Guindos, BoE’s Pill. EARNINGS – Pernod Ricard (miss), Commerzbank, (+7.5%) Orange, Airbus, Standard Chartered (+2.11%), Nestle (in-line -0.49%) , Paramount & Dropbox.
Biggest FX Mover @ (07:30 GMT) USDJPY (-0.34%). Rallied to 134.35 yesterday but has dipped to 133.75 now. MA’s now flat, MACD histogram & signal line positive but declining, RSI 51.42, H1 ATR 0.196, Daily ATR 1.588.
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Stuart Cowell
Head Market Analyst
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