Dollar Index Probing 10-Month Highs After US Retail Sales
Matt Weller, CFA, CMT April 18, 2019 2:34 PM
FX traders were casting a wandering eye ahead toward a long holiday weekend this morning, but the US retail sales report pulled their attention back to their monitors.
After a disappointing -0.2% m/m reading in February, US retail sales surged 1.6% in March, with “core” sales (ex-automobile purchases) also coming in strong at 1.2% m/m. The stellar reading on the US consumer, combined with disappointing manufacturing data out of Germany and France, has reinforced the “best house in a bad global neighborhood” trade for the US economy and taken the US dollar index up to test key resistance at its 10-month high in the mid-97.00s:
Source: TradingView, FOREX.com
From a technical perspective, the dollar index is showing a large “ascending triangle” pattern, which could foreshadow an explosive rally if the 97.70 barrier is eclipsed. That said, with many financial centers out on holiday tomorrow and on Monday, the lack of newsflow could keep the dollar index contained for now.
Looking ahead to next week, next Friday’s advance Q1 GDP report will be the marquee event. After today’s blowout retail sales report, the Atlanta Fed’s GDPNow model is pointing toward a 2.8% annualized growth rate in Q1; a reading in that range could be the catalyst for a big bullish breakout in the buck next week.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.