Retail Sales Weaker but China Trumps Data
Joe Perry December 13, 2019 2:28 PM
We could see a risk off move with S&P 500 moving lower and USD/CNH moving higher!
US Retail Sales (MoM) for November was 0.1% was 0.5% expected, which was a huge miss in the data. October’s number was revised slightly higher to 0.4% from 0.3%, however that was not enough to make up for this month’s miss. In addition, The Core Retail Sales (MoM) was 0.1% for November vs 0.3% expected. Again, October’s number was revised slightly higher to 0.3% from 0.2%, however this also was not enough to make up for this month’s miss. The S&P 500 Futures initially sold off on the data release, however they were immediately bought back up.
Source: Tradingview, FOREX.com, CME
Why were stocks bought on the release of the poor data? Trump yesterday announced that a Phase One trade deal between the US and China has been reached. China has yet to comment on the deal, however they announced that they will have a press conference at 10:30pm local time to discuss the “relevant progress of China-US economic and trade consultation”. As a result, the market is expecting China to announce that a deal has been reached and therefore a risk-on scenario should result.
USD/CNH is not pricing in a positive press conference at the moment. After yesterday’s selloff in USD/CNH, one has to wonder why the pair isn’t currently trading even lower today. Granted, price did halt that the 200-day moving average and the bottom of the downward sloping channel on the daily timeframe dating back to mid-August, but with a deal so grand as this, one would expect technicals not to matter as much and continue to move lower.
Source: Tradingview, FOREX.com
On a 240-minute timeframe, price moved overnight to its lowest levels since June and the 50% retracement level from the March 20th low to the September 2nd highs, and has since bounced ahead of the press conference. Support continues to be at today’s lows near 6.9200.
Source: Tradingview, FOREX.com
Keep an eye on the press conference. If there is any hesitation on Phase One being a done deal, we could see a risk off move with S&P 500 moving lower and USD/CNH moving higher!
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.