Intraday Market Thoughts

Dollar Seeks Direction, RBA Minutes Up Next

by Adam Button
Jul 15, 2013 22:53

The US sizzled in European trading, sending USD/JPY above 100.00 and EUR/USD below 1.30 but a poor reading on June retail sales reversed the gains. Overall sales rose 0.4% compared to 0.8% expected. With volatile auto and gas sales stripped out, sales fell 0.1% compared to the +0.4% consensus – it was the lowest reading since June 2012. 

Economists had expected rising housing prices, equities, jobs and consumer sentiment to boost spending but the improvement didn't materialize. Afterwards, a number of economists downgraded Q2 growth forecasts below 1%. At that pace, it will be nearly impossible for the Fed to taper in September.

EUR/USD jumped after the release and eventually hit 1.3075, just shy of the Asian high of 1.3080. USD/JPY finished the day a half-cent higher at 99.75 but was well below the 100.47 session high. Overall, the market is struggling for direction ahead of Bernanke's testimony on Wed-Thurs.

One market that isn't struggling for direction is the S&P 500, which closed 0.14% for an eighth consecutive gain. The winning streak matches a January climb for the longest rally of the year but the 4.3% cumulative gain dwarfs the 2.3% rally earlier in the year. The index is now just 5 points from the record high set in May.

The main event on the calendar is the minutes of July RBA meeting at 0130 GMT. The market is pricing a more-than 60% chance of a rate cut in August following comments from Stevens. He said the board deliberated for a long time at the last meeting and it will be interesting to see how close they were to cutting.

2 EURUSD are in progress, 1 USDJPY hit all targets, 1 GBPUSD is in progress, another was stopped out. USDCAD, USDCHF and AUDUSD remain in progress ahead of tonight's RBA minutes and This week's BoC rate decision. All these trades and charts are in the latest Premium Insights.
Act Exp Prev GMT
Retail Sales (JUN) (m/m)
0.4% 0.8% 0.5% Jul 15 12:30
Retail Sales (ex. Autos) (JUN) (m/m)
0.0% 0.4% 0.3% Jul 15 12:30

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