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NY Open: Retail sales marked down

Equities 4 minutes to read
Michael O’Neill

FX Trader,

Summary:  Today's New York open sees Wall Street starting in the red as traders fret about a host of issues including the US/Saudi showdown and the Brexit stalemate.

Retail sales were supposed to rebound from August’s disappointing 0.1% result. They didn’t. The September result was the same. Even worse, the previous two months’ results were revised downwards. The expected rise of 0.3% for core retail sales didn’t happen either.  Instead, they declined 0.1% in September. Hurricane Florence played a role in disrupting the data, which helps to explain why markets are ignoring the result.

Wall Street is in the red as of 16:00 GMT. The DJIA lost 0.26%, the S&P 500 is down 0.49% and the Nasdaq dipped 0.96%.  Bank of America (Bac: NYSE) reported a 35% jump in quarterly profit, but that wasn’t enough to turn sentiment positive.

Traders are worried about a host of issues.  President Trump is warning Saudi Arabia of “severe consequences” if they are not more forthcoming on the disappearance of a Washington Post journalist, last seen entering the Kingdom’s embassy in Turkey.  Saudi Arabia promised to react to any aggression, implying oil could be used as a weapon. King Salman bin Abdulaziz denied any government involvement.  US Secretary of State Michel Pompeo is reportedly going to meet with the king.  

Oil prices initially soared on the US/Saudi threats. WTI rose from Friday’s close of $71.52/barrel to $72.71/b. They have entirely reversed the move, and WTI is sitting at $70.96/b.

FX markets are benign. The US dollar is mostly unchanged against the G-10 major currencies. Sterling has been choppy. GBPUSD gapped lower at the Asia open, recovered in Europe and New York traders extended the gains to 1.3180. Prices slipped back to 1.3135.

Still, GBPUSD is fairly robust considering the rash of negative Brexit headlines which suggests traders are positioning for some sort of deal being announced later this week. GBPUSD is in an uptrend while prices are above 1.3120 on an hourly chart, looking for a break above 1.3180 to extend gains to 1.3250.
GBPUSD hourly
GBPUSD (source: Saxo Bank)

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