17-10-2023 - Daily Recap
Retail Sales data still high, Gold GAP filled and non stealth "Yentervention"
Retail Sales data still higher, new headlines of military tensions and Gold technically fill the opening gap of the week.
Yesterday, markets were pretty quiet and the “cease fire” headlines that came during the weekend is seen as de-escalation where Gold and Dollar opened the week with gaps down. Beside Dollar kept is bearish and corrective move, Gold on London Open pulled back from 1910, kept above and today retested previous highs.
Gold failed to break 1930s, the Friday’s close price and the headline from US Defense headline that they have ready 2000 troops to deploy if needed, faded out the Retail Sales report which came high at 0.7% but below the upwardly previous revised of 0.8%.
Such report should have lead to Gold bears due to macro fundamentals in play, although, and as we have been alerting, Israel conflict headlines can shift the sentiment on Gold for short term and we need to adapt ourselves.
Looking at the Retails Sales report from Census Bureau, 3% increase on Miscellaneous Store Retailers was the biggest contributor followed by Motor Vehicles and Nonstore Retailers.
On the other hand, Clothing and Electronics were contributors for most decreasing with -0.8%. Such report is still showing signs data is still resilient supporting rates higher for longer.
Before NYSE open we also had pretty solid Industrial Production that came above forecast at 0.3% with previous downward revision to 0% from 0.4%.
Last but not least, today Yen suffered a spike to the upside with alarms ringing of a potential stealth intervention, but quicker was identified that such spike was related to BoJ headline forecasting CPI to approach 3% for 2023. Remember that Japan is still playing the ultra loose monetary policy leading to bearish Yen and changes on such policy would completely shift the sentiment. So such headline gave short term upside move on Yen but quickly faded out, leading to spikes down on all xxxJPY pairs. Personally I don’t see another Yen intervention within 150 price level, but possible on 152/155 but of course would depend of markets anatomy and overall economic situation when price reach those levels.
Tomorrow will be quiet day in terms of economic events with only Housing data that I suspect to hold minimum weight but we need to keep an eye out on headlines due to Israel conflict.
Stay sharp.