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!
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.