Market News & Analysis
Retail Sales Weaker but China Trumps Data
Joe Perry December 14, 2019 1:28 AM
US Retail Sales (MoM) for November was 0.1% was 0.5% expected, which was a huge miss in the data. October’s number was revised slightly higher to 0.4% from 0.3%, however that was not enough to make up for this month’s miss. In addition, The Core Retail Sales (MoM) was 0.1% for November vs 0.3% expected. Again, October’s number was revised slightly higher to 0.3% from 0.2%, however this also was not enough to make up for this month’s miss. The S&P 500 Futures initially sold off on the data release, however they were immediately bought back up.
Source: Tradingview, City Index, CME
Why were stocks bought on the release of the poor data? Trump yesterday announced that a Phase One trade deal between the US and China has been reached. China has yet to comment on the deal, however they announced that they will have a press conference at 10:30pm local time to discuss the “relevant progress of China-US economic and trade consultation”. As a result, the market is expecting China to announce that a deal has been reached and therefore a risk-on scenario should result.
USD/CNH is not pricing in a positive press conference at the moment. After yesterday’s selloff in USD/CNH, one has to wonder why the pair isn’t currently trading even lower today. Granted, price did halt that the 200-day moving average and the bottom of the downward sloping channel on the daily timeframe dating back to mid-August, but with a deal so grand as this, one would expect technicals not to matter as much and continue to move lower.
Source: Tradingview, City Index
On a 240-minute timeframe, price moved overnight to its lowest levels since June and the 50% retracement level from the March 20th low to the September 2nd highs, and has since bounced ahead of the press conference. Support continues to be at today’s lows near 6.9200.
Source: Tradingview, City Index
Keep an eye on the press conference. If there is any hesitation on Phase One being a done deal, we could see a risk off move with S&P 500 moving lower and USD/CNH moving higher!
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.