General market theme
On Friday the focus was on the release of the Retail Sales report from the US and we had been talking about the importance of the event all week since investors seemed to be waiting anxiously for these levels in order to confirm the recent uptick in dollar’s outlook. However even though the consumer spending report exceeded its mark and printed in a very bullish manner the dollar didn’t enjoy an equally strong rally, the US currency indeed gained across the board but the reaction lacked any serious follow-through.
This reaction from the market participants can only be interpreted in one way: investors appreciated the strong Retail Sales report and are eyeing a further pickup in dollar’s strength at some point but they are not ready to fully back the US currency at this time. This means that the coming weeks are expected to be equally uncertain in terms of the way the markets will trade as we move closer to the end of Q2 and dollar’s outlook will remain in doubt.
Price action highlights
The euro pushed lower on the back of the stronger Retail Sales report from the US and the decline took the rate below the 1.1300 level. As we mentioned above though the losses were limited and this can be confirmed by the diminishing momentum behind the euro’s decline. Does this mean that we should expect a reversal and a push higher? Not yet as a reversal at this point would require a fundamental trigger and with the economic calendar being empty during the first 24 hours of the week any correction to the upside should be approached with caution.
The cable was on a similar tune on Friday and the stronger consumer spending report from the US put the currency under pressure. The failed breakout to the upside earlier last week was followed by a decline on the back of the Retail Sales figures and the pound dropped below the 1.4400 level to trade as low as 1.4340 but again the momentum was limited as we talked about above. However the bias remains bearish for the cable and even though todays’ docket is empty we could expect further losses from the pound as we move further into the week.
Focus of the day
Apart from a couple of tier-3 reports today’s calendar is virtually empty of any market-moving events. The release of the Empire Manufacturing index in the US followed by the NAHB Housing Market index are the only two events worthy of our attention today but their effect on the price action is expected to be minimal.
Disclaimer: The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.