Sterling Surges as UK Retail Sales Outperforms

19 August, 2016

UK Retail Sales (YoY and MoM) and Core Retail Sales figures (YoY and MoM) in July, released earlier today, outperformed. Sterling strengthened across the board.

Retail sales (MoM) rose to 1.4% in July, from -0.9% in June, beating expectations of 0.2%.
Retail sales (YoY) rose to 5.9% in July, from 4.3% in June, beating expectations of 4.2%.
Core retail sales (MoM) increased by 1.5% in July, from -0.9% in June, beating expectations of 0.4%.
Core retail sales (YoY) increased by 5.4% in July, from 3.9% in June, beating expectations of 3.9%.

After the release of retail sales, GBPUSD surged from 1.3076 to the high of 1.3171, a 0.73% rise, hitting a one-week high. The major resistance level at 1.3100 was broken with strong bullish momentum, followed by 1.3140 and 1.3150. It is currently holding above the newly formed support level at 1.3150, forming a new uptrend line. Be aware of a pullback as the 4 hourly KD indicator is more than 80, implying it is overbought.

The downside support line is at 1.3150, followed by 1.3140, 1.3115 and 1.3100.
The upside resistance level is 1.3170, followed by 1.3180 and 1.3200.

As a whole, the series of first post referendum UK economic data released this week, was better-than-expected and has eased market concerns over the initial aftermath of Brexit.

[gbpusd-h4-]

FOMC Minutes

The minutes for the FOMC meeting, released yesterday, resulted in the dollar weakening across the board.

Despite the robust growth in the job market in June and July, household spending and business investment remains weak.

Inflation is still below the Fed’s 2% target, due to the earlier drop in energy prices and lower prices for imported goods. Exports have declined as foreign demand subdued. The global economy has been subject to vulnerability and growth is still sluggish.

The Fed anticipates gradual rate hikes, yet the recent economic indicators have given mixed signals. As a result, the Fed takes a cautious stance on a rate hike by watching carefully the job market, inflation, and global economic growth. It is not impossible that rates be cut to zero in response to future large aftershocks.

As long as economic data remains mixed, we can expect patience from some Fed members before voting for further rate hikes.

The Dollar Index Future (DXY)

In the first five minutes after the FOMC announcement, the dollar index surged to 95.06 from 94.86, then pulled back sharply after testing the significant resistance at 95.00. Hitting the intra-day low of 94.47, a 0.62% fall. The downtrend support line was broken.

This morning the bearish momentum continued, by opening low, plunging to a lower low of 94.335. It is currently testing the major support level at 94.35. If it is confirmed broke through, the next support level is at 94.20 followed by 94.06 and 93.94.

The resistance is the 50% Fibonacci retracement level at 94.73, followed by the significant level at 95.00 and then 95.20. Be aware of a rebound, as the 4 hourly KD indicator is below 20, implying it is oversold.


Source link  
Gold Bears Test Near Term Major Support

Gold spot price has turned bearish since 27th Feb, after hitting a one-and-a-half month high of 1263.73...

GBPUSD Retreats Post Surge on Theresa May’s Hard Brexit Speech

Trump stated on Tuesday that a strong dollar is risky to the US economy, as it weakens competitiveness of US exports and corporate profits...

The dominant dollar

The dollar appreciated a further 1% through the course of Thursday in the wake of the Fed meeting result seen Wednesday evening. We saw some pull-back into the NY close and again through the Asia session...


Crossing the Bridge

The usual bridge day between Thanksgiving and the weekend arrives which will keep volumes light and ranges on the tighter side, all being well. That’s unless you are a retailer, in which case this is known as ‘Black Friday’, a phenomenon that has crossed the Atlantic in recent years...

Finally

Markets and polling are looking for a Clinton win today, but the margin in the polling is not sufficient to give any sense of comfort. This is more so after the experience of the Brexit vote back in June, where the polls were suggesting a win for the ‘remain’ side and the vote went the other way...

Gearing up for higher US rates

The move higher on the US 2Y bond yield has had a notable effect on currencies over the past week, with the yield pushing at levels last seen 4 months ago. This reflects the increased expectation that the Fed will move on rates at the December meeting...


Dollar Index Retraced after Testing the Significant Resistance at 96.00

The US CPI figures released last Friday were better-than-expected. The dollar index surged, broke three resistance levels at 95.40, 95.60 and 95.80 respectively...

Last Full US Economic Health Check Before FOMC

The dollar index has rebounded since 8th September after tested the support line at 94.50. On 13th September, the index broke the downtrend line resistance and held...

Oil Slide Weighs on Energy Stocks

The weekly US Crude Oil Inventories figure released yesterday was 2.276 million barrels, less than the previous figure of 2.501, yet surpassing the expectations of 0.921...

  


Share: