Markets hit by caution ahead of US retail sales data

14 June, 2019

The mood across financial markets was cautious this morning as rising geopolitical tensions in the Middle East and persistent uncertainty over US-China trade developments capped risk appetite.

Asian stocks were subdued on Friday after China’s industrial output dropped to its lowest levels for more than 17 years in May. The risk-off tone and disappointment from Asia have already infected European markets which are trading lower this morning. With a sense of caution also kicking in ahead of next week’s Federal Reserve meeting, Wall Street may struggle to maintain gains this afternoon as investors adopt a guarded approach towards riskier assets.

Although global equity markets have performed relatively well in June thus far, the quarter-to-date (QTD) gains across the board are nothing to celebrate. One must really question the sustainability of the stock market rally, given the storm of headwinds weighing on global sentiment. It must be kept in mind that the fundamental ingredients for a selloff across stock markets are bubbling dangerously in the cauldron. Equity bears remain in the vicinity and may be simply waiting for the perfect opportunity to make their move.

Dollar waits for US retail sales report


The main risk event for the Dollar today will be the highly anticipated US retail sales report for May which should offer some fresh insight into the health of the US economy.

Sizzling trade tensions and disappointing economic data from the States have fuelled speculation over the Federal Reserve cutting interest rates this year. Since the Federal Reserve will be meeting next week, the retail sales data will play an important role in shaping expectations for the central bank’s forward guidance. Should retail sales disappoint by printing below 0.6% month-on-month forecast, the Dollar will feel the pain, as the 75% probability for a Fed rate cut in July potentially ticks higher.

Looking at the technical picture, the Dollar Index is trading around 97.00 as of writing. Prices have scope to retest 96.50 is retail sales disappoint.

Commodity spotlight – Gold


It has been an unquestionably bullish trading week for Gold which has rallied to a yearly high above $1355.

The forces behind Gold’s aggressive appreciation revolve around geopolitical tensions in the Middle East, ongoing US-China trade tensions and rising expectations over the Fed cutting interest rates. With these key fundamental drivers straining investor confidence and souring appetite for riskier assets, Gold is set to shine as investors sprint to safe-haven assets. From a technical perspective, Gold bulls are in the driver’s seat with a weekly close above $1360 opening the doors towards $1372 and $1390, respectively.


Source  
To believe or not to believe in virus vaccine hopes?20 May, 2020  

The euphoria that roared across financial market sentiment throughout yesterday and encouraged huge rallies in major U.S stock markets is running thin on flames today...

Gold blasts to new highs but can this joy last?19 May, 2020  

Investors are happy to add risk into portfolios with stocks and oil prices cheering this sentiment but at the same time, gold has reached its highest level...

Will the clock unveil more COVID-19 cases as restrictions ease?12 May, 2020  

Market volatility remains muted, however the crossroads appear to be getting closer where questions will be asked if eased restrictions are contributing...


Sell in May and go away?4 May, 2020  

On Covid-19 related news, states across the US are taking steps to restart the economy by easing stay-at- home orders and allowing non-essential businesses to reopen...

Will markets follow Pied Piper Powell?29 Apr, 2020  

The Dollar is weaker against all G10 and Asian currencies ahead of today's Fed rate decision and the US Q1 GDP announcement. The Dollar index (DXY) has been...

Gold dives despite market turmoil while Dollar surges22 Apr, 2020  

Gold struggled to shine on Tuesday, falling more than 1% as chaos in the oil markets triggered panic selling across the board and forced investors...


Gold Daily: Bullish sentiment prevailing15 Apr, 2020  

The price of Gold, on the D1 time-frame, made a short-lived downward shift until March 16 when a lower bottom was recorded at 1451.13. Buyers found the price attractive...

Markets path dictated by longevity of Covid-1915 Apr, 2020  

Asian stocks and currencies are mixed while US equity futures are pointing south, offering a relatively subdued reaction to more dire warnings about the fate...

COVID-19 pandemic: A bumpy road ahead8 Apr, 2020  

The world has finally seen a glimpse of light at the end of this dark tunnel. The coronavirus outbreak is starting to level off across many countries and cities...