Intraday Market Thoughts

Good Isn't Good Enough For USD, RBA Minutes Next

by Adam Button
Apr 14, 2014 23:39

The limp US dollar reaction to the upbeat retail sales report highlights the divergence between market and economist expectations. On Monday, the Australian dollar was the top performer while the euro lagged. The RBA minutes are the highlight in Asia-Pacific trading.

Headline retail sales rose 1.1% in March, the best month since Sept 2012 and beating the 0.9% consensus. The previous month was also revised to +0.7% compared to +0.3% originally reported. The market more closely watches the control group and it painted a similar picture up 0.8% compared to 0.5% expected. There weren't any caveats in the report but the dollar couldn't take advantage, rising 15-20 pips and then fading. USD/JPY rose above 102.00 then slipped back to 101.70. EUR/USD and cable fell to session lows but wouldn't go any further.

If the dollar can't rally on good news, especially as it comes off a rough week, it's tough to envision a push higher. A key spot to watch is bonds. The 10-year Treasury chart is similar to USD/JPY and a break below 2.57% from the current 2.63% is an inflection point to watch.

The largest move on the day was in the euro but it was largely on the open. The catalyst was jawboning from Draghi but strong words are no replacement for action and the market doubts his sincerity, at least in the near term.

The focus switches to the Australian dollar lately with the minutes of the April RBA meeting due at 0130 GMT. The minutes could highlight the more-optimistic shift from Stevens & Co. Comments about investment and housing inflation could grab headlines and fuel AUD gains.

Our Premium long is sitting on a 150-pip profit and draws closer to its final target, awaiting for tonight's RBA minutes. Our trades in EURUSD, USDJPY, USDCAD and USDCHF remain in progress, while GBPUSD awaits Tuesday's UK CPI and Wednesday's release of jobless/earnings data. All trades & charts are in the latest Premium Insights.
Act Exp Prev GMT
Retail Sales (MAR) (m/m)
1.1% 0.8% 0.7% Apr 14 12:30
Retail Sales (ex. Autos) (MAR) (m/m)
0.7% 0.5% 0.3% Apr 14 12:30
BRC Retail Sales Monitor - All (MAR) (y/y)
1% -1% Apr 14 23:01
CPI (MAR) (m/m)
0.2% 0.5% Apr 15 8:30
Core CPI (MAR) (y/y)
1.7% Apr 15 8:30
CPI (MAR) (y/y)
1.6% 1.7% Apr 15 8:30

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