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Daily Analysis: Dollar Jumps on Retail Sales Beat

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Daily Analysis: Dollar Jumps on Retail Sales Beat

Introduction

This article was posted on Tuesday, 18:32, UTC.

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2462 -0.07%
DAX 12177 0.10%
WTI Crude Oil 47.45 -0.29%
GOLD 1280.00 -0.75%
Bitcoin 4085 -4.13%
EUR/USD 1.1740 -0.33%

Global stocks are virtually unchanged today following yesterday’s strong rally, as volatility remains low, trading volumes are back to their summer normal. Asian equities are relatively strong as the North Korea related fears eased further, while European stocks are weak after a string of negative releases today, including the German GDP and the British CPI and PPI indices. While markets still seem quiet and last week’s storm passed quickly, the internal weakness in the US exchanges and the price action in Europe suggest a bumpy road ahead for bulls.

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EUR/USD, 4-Hour Chart Analysis

Currency markets are way more active, as the much awaited US Retail Sales report caused turmoil in the Dollar before next week’s Jackson Hole symposium. The Fed annual meeting usually provides important clues regarding the central bank’s monetary policies. With all the conflicting signals lately, the Dollar is reacting strongly to every new piece of information.

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The Great British Pound is the weakest major currency following the weak inflation data, losing ground to all of its peers, and trading back near 1.28 against the Greenback.  Gold fell back to $1275 thanks to the North Korea de-escalation and the strength in the Dollar, while oil and industrial metals are also under pressure. Yesterday’s negative Chinese releases are still weighing on the segment, and the recent tensions regarding the US-Chinese trade relations are also negative for global trade.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

Bitcoin finally entered a volatile correction today, and although it’s very early to call a top in the coin, the easy part of the rally seems to be over, as the overbought momentum readings reached extremes. BTC fell by more than 10% in a few hours, and the selling wave dragged the other majors lower, although the likes of Dash and Monero have been holding up well in the face of the broad weakness. Ethereum, Litecoin, Ripple, and Ethereum Classic followed BTC lower, with a latter two still being stuck in their downtrends, while ETH and LTC still looking in better shape. More “rotation” between the coins is expected, as BTC is expected to be relatively weak after its stellar run.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 recovered well after last week’s correction and it is back within striking distance of its all-time high. The rising long-term trend remains intact and the short-term picture turned bullish again, despite the clear overvaluation and the internal weakness. Only 55% percent of stocks on the NYSE exchange trade above the 200-day Moving Average, while a healthy bull market would mean around 70-75% in that measure. That said, a rally to new highs is in the cards in August, as summer trading is expected to continue.                                                                           

S&P 500, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA RBA Meeting Minutes
8:00 GERMANY Prelim GDP 0.6% 0.7% 0.6%
9:15 SWITZERLAND PPI Index 0.0% 0.0% -0.1%
10:30 UK CPI Index 2.6% 2.7% 2.6%
14:30 US Retail Sales 0.5% 0.3% -0.2%
14:30 US Core Retail Sales 0.6% 0.4% -0.2%
14:30 US Empire Manufacturing Index 25.2 10.2 9.8

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:30 UK Hourly Earnings 1.8% 1.8%
10:30 UK Unemployment Rate 4.5% 4.5%
10:30 UK Claimant Count 7,200 6,000
11:00 EUROZONE Flash GDP 0.6% 0.7%
14:30 US Building Permits 1.25 mill 1.28 mill
14:30 US Housing Starts 1.23 mill 1.22 mill
16:30 US Crude Oil Inventories -6.5 mill
20:00 US FOMC Meeting Minutes

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Mate Cser

Mate Cser

Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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