Intraday Market Thoughts

Retail Sales Mixed, Stocks Dead Cat Bounce

by Adam Button
Oct 15, 2018 22:26

US retail sales were soft on the headline but the details were solid. US stocks displayed a deadcat bounce, suggesting that false rebounds are ere to stay into next month's US mid-term election.The New Zealand dollar was the top performer Monday while the US dollar lagged. Chinese CPI is due up next tonight, followed by UK jobs where the earnings figure is closely watched. The Premium video focusing on metals and FX is posted below.

US retail sales rose just 0.1% in September in the second consecutive month of lackluster gains but there were signs that Hurricane Florence might have curbed spending. In addition, the closely-watched control group rose 0.5% compared to 0.4% expected.

The market took the report in stride with little reaction in the FX market. USD/JPY had earlier slid to 111.65 to start the week on a soft note.

The bigger market move came on the Bank of Canada's business outlook survey. It showed stronger sales forecasts, a tighter jobs market and a jump in investment intentions – and the survey was done before the new NAFTA deal. As a result, USD/CAD fell to 1.2955 from 1.3050 earlier in the day.

The BOC meets next week and the report made a hike a near-certainty and also raised the odds of another hike in December or January. Separately, Canadian exports to China are up 23% in the first half of the year in a sign that Chinese are canceling US orders and redirecting them elsewhere.

Looking ahead, Chinese CPI is the next item on the calendar at 0130 GMT. The consensus is for a slight acceleration to 2.5% y/y from 2.3%. We also continue to await the US Treasury FX manipulation report.

Act Exp Prev GMT
Core Retail Sales (m/m)
-0.1% 0.4% 0.2% Oct 15 12:30
CPI (q/q)
0.7% 0.4% Oct 15 21:45
Consumer Prce Index (y/y)
2.5% 2.3% Oct 16 1:30

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