Retail Sales recap: American Consumer is alive and well
Joe Perry October 16, 2021 3:35 AM
US Retail Sales for September MoM increased by 0.7% vs an expectation of -0.2%.
US Retail Sales for September MoM increased by 0.7% vs an expectation of -0.2%. August’s print was also revised higher from 0.7% to 0.9%. It appears Americans haven’t been affected yet by any increasing costs due to supply chain issues. Retail sales ex-autos MoM for September were up 0.8% vs an expectation of 0.5% and an August revision from +1.8% to +2%. We’d be remiss however, if we didn’t note that the New York State Empire Index for October was only 19.8 vs 27 expected and a September print of 34.3. The NY State Index is the first of the regional October manufacturing prints. This points to slower factory growth (mainly because of higher delivery times and higher prices paid). Relating the NY State Manufacturing Index to Retail Sales (on a month delay), it insinuates that although Americans are still buying, they are waiting longer and paying more for the same products. Watch the Manufacturing Indexes over the next few weeks to see if this is the beginning of a trend.
The S&P 500 is “ignoring” the stronger retail sales data, moving higher above the 61.8% Fibonacci retracement from the all-time highs on September 3rd to the lows of October 1st, at 4440.5, In addition, the large cap index moved back above the 50-Day Moving Average, which it hasn’t traded above since September 17th. By “ignoring”, it is meant that since March 2020, good data has been bad for stock markets, as it would mean that the Fed is closer to reducing monetary stimulus. Is it possible that the S&P 500 is already pricing in a November 3rd taper announcement? Horizontal resistance is at the September 27th highs of 4485 and then the previous all-time highs at 4551. Support is at the 50 Day Moving Average near 4440.1, the highs of October 7th near 4431.8 and the October 14th lows at 4364.7.
Source: Tradingview, Stone X
On the other hand, EUR/USD has barely budged. After yesterday’s shooting star candle (a reversal signal), the pair is drifting within yesterday’s range between 1.15839 and 1.16244. As the retail sales and NY State Manufacturing Index doesn’t seem to be affecting the US Dollar, it appears the pair is waiting for the next catalyst. (Note that if EUR/USD closes above 1.15839, it will invalidate the shooting star). Resistance is at previous lows of 1.1664, ahead of the 50 Day Moving Average at 1.17173. First support is at the October 12th 15-month lows at 1.15245, and then a confluence of support between 1.14902 and 1.15149. Notice that the RSI has unwound from oversold levels, giving the green light to the pair to move lower.
Source: Tradingview, Stone X
Markets appear to be ignoring the stronger retail sales print heading into the weekend. Earnings season continues next week, with NFLX being the first of the FANNGs to report. Watch for guidance from companies to see if they are fearful of supply chain issues or higher inflation. Earnings guidance may be the next catalyst!
Learn more about forex trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.