NY Open: Wall Street shrugs off retail print

Hurricane Florence made landfall this morning. It has been downgraded to Category 1, but the sheer size of the storm suggests flooding will be like that of a Category 4 storm.

The storm, however, has not blown any ill winds onto Wall Street. The major indices have added to this week’s gains in early trading despite weaker-than-expected Retail Sales data. CPI and Core CPI were below consensus forecasts, but upward revisions to the July report offset the disappointment. Wall Street is emboldened by the mild thaw in US/China trade relations sparked by reports of a new round of discussions in the next few weeks. Pre-weekend profit-taking may limit gains today.

Chart: change in retail sales

Source: US Census Bureau
Today’s US economic data flipped dollar losses at the open to gains by mid-morning. However, the morning’s moves barely moved the needle on the greenback's losses since last Friday’s New York close. GBPUSD, the biggest gainer for the week, rose 1.41% as of 13:30 GMT. The Japanese yen was the only currency to lose value. It fell 0.81%. 

USDJPY is in an uptrend channel bound by 111.50 and 112.20 supported by a break of resistance at 111.60 and US 10-year Treasury yields flirting with 3.0%.

Global markets get a respite from top-tier US economic reports next week leaving traders to search elsewhere for direction. USDJPY traders will be focused on Wednesday’s Japan trade data and the Bank of Japan monetary policy report. As usual, it shouldn’t have any impact on FX markets as traders are more focused on US Treasury yields and US/China trade. The Reserve Bank of Australia minutes are out on Tuesday, but they won’t do anything to reduce the downward pressure on AUDUSD.
USDJPY (four-hour, source: Saxo Bank)

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