Retail Sales Weaker but China Trumps Data

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 20^th low to the September 2^nd 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!