12 August 2016 at 11:49 GMT
Dollar's rather listless performance in recent weeks — aside from the temporary boost from last Friday's NFP — could get a legup from today's retail sales print due within the hour. GBPUSD continues to struggle below the 1.30 handle meanwhile and fresh turn for USDJPY and EURUSD both look dependent on the strength or otherwise of the US data.
- US Advanced Retail Sales for July. M-o-m expected at 0.4%, prior 0.6%
- US Retail Sales Ex Auto July. M-o-m expected at 0.1%, prior 0.7%
- US Retail Sales Ex Au and gas July Expected at 0.3% vs Prior 0.7%
- US PPI Final Demand for July. M-o-m 0.1% vs Prior 0.5%
- US University of Michigan Sentiment Preliminary for Aug 91.5, Prior 90 (1400)
In EURUSD the 55-day moving average has been a magnet so far pulling EURUSD back despite attempts to go mostly higher. Still looking at the tech resistances of late at 1.1190 area and then more importantly 1.1227 (the 100-day moving average). EURUSD has failed since the Brexit result to close on a weekly basis above 1.1166, so a close of week above that could keep the pressure on the upside for next week. Downside still has decent tech support at the 1.1081 area (200-day moving average).
USDJPY still looks contained on the upside awaiting the Bank of Japan meeting in September. USDJPY moves very closely with gold (higher gold, lower USDJPY) and with gold running out of steam (see Commodities section) there is first technical support around the 10-day moving average at 101.71 area. The first decent tech resistance is around 102.5. GBPUSD has closed continuously lower on a daily basis than opening levels since August 3, but the question is whether this justifies some retracement, but close of day and week below 1.30 and especially 1.29 adds to sentiment for a weaker GBP going forward. Take care of sharp rallies, especially if 1.3100 is taken out. AUDUSD we have liked higher from when it was around the 0.7600 area, but it is now testing the lows (0.7660) which we have been seeing as tech support area and which could open for moves towards the 0.7600 area. 0.7750 needs to be taken on upside for any new momentum.
FX Options volatilities
USDJPY: Front-end volatilities are still under pressure… 1-month currently trades at 9.5%, down 3.25 vols from the high two weeks ago. The market continues to shift positions selling at the front-end, but buying back-end. 1-year seems to have found a stable level around 11%.
EURUSD: vols are trading a bit lower again today, as spot continues in a tight range. However we do have some US data coming out later today, which could provide a movement in spot, which vols so desperately need at the moment.
EuroStoxx 600 is flat on the day which is largely where it opened. Low volumes complete a positive week for global markets. Retail and industrials have marginally outperformed whilst materials fell on weak metal prices. Oil is holding onto recent gains aiding related stocks.
The Restaurant Group is up 14% after replacing CEO with ex Paddy Power head Andy McCue.
Maersk is up 4% after the company confirmed it is faring well in tough market conditions thanks to successful cost cutting.
K+S is down 2.25% after missing yesterday as potash prices tumble.
JC Penny reports its numbers before the US open.
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Will today's US retail report for July spur dollar on? Photo: iStock
— Edited by Martin O'Rourke