Intraday Market Thoughts

From China Data Bounce to US Retail Sales

by Patrik Urban
Oct 15, 2012 12:48

No surprises from Tokyo; EU summit ahead; Chinese CPI slows; Swiss PPI mixed. Focus turns to retail sales; empire fed manufacturing and business inventories. The latest of the Premium Insights includes EURUSD, EURJPY, GBPUSD, AUDUSD, CADJPY,oil and CADJPY. These also include detailed chart analysis on multi-timeframe stochastics on GBPUSD. Existing trades on gold and silver and intact. See direct link below.

USD was bid after the Asian open but all gains were lost when London traders got to their desks to rally on the back of the strong China trade data and soft CPI figures. European equities are gaining around 1% and the relative strength winner is EUR while JPY is the weakest.

The G7, IMF & WB meeting in Tokyo did not reveal any surprises. Noteworthy is that central bankers attending the meeting signaled that the ECB will not cut interest rates or undertake any other non standard measures before Spain formally seeks a bailout. The market will start to focus on the EU economic summit that begins on Thursday. Main topics will be Greece and Spain (and subsequent activation of the OMT) but other projects are likely to be discussed as well, mainly the banking union and new fiscal rules, MNI reports. EURUSD pushed higher and trades around 1.2965.

Fundamental reports showed that Chinese consumer inflation eased in September to 1.9% from previous 2.0% y/y and Swiss PPI eased to 0.3% from 0.5% m/m but rose 0.3% from -0.1% y/y.

The NY session begins at 8:30 am ET with September retail sales that are expected to slow to 0.7% after rising at a solid pace the last two months while the core figure is seen at 0.6% from 0.8%. Empire state manufacturing is anticipated to improve to -4.5 in October from -10.4 and finally business inventories at 10:00 am are expected at 0.5% in August from 0.8%. Markets are also likely to react to the Richmond FED president and the FOMC member Jeffrey Lacker who delivers a speech at 12:45 pm on economic outlook.

CAD traders await the BOC business outlook survey due at 10:30 am and the BOC governor Mark Carney speech that begins at 3:20 pm. The text will released at 3:05 pm and the press conference that follows is scheduled to start at 4:10 pm.

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