Last week contained one important event that effected and will continue to weigh on traders thought of price movements and profits. The retail numbers for the Christmas shopping season came out of the US. They were exactly as expected: Core retail sales grew by 0.4%. Core Retail Sales measures the change in the total value of sales at the retail level in the U.S., excluding automobiles. It is an important indicator of consumer spending and is also considered as a pace indicator for the U.S. economy. The effect that we trade is movement in the USD. And effect we had. At press time the USD weakened 2.26% since the release of the report. That is a significant enough movement to likely continue well into this week. There will be corrections. This is an over-reaction to a crucial report that was hardly bad. But, as these are capital markets, it is human reaction to events that we trade on. Logic does not always prevail and we often don’t perceive the total reality until after events unfold. But, a move like this is significant and tradable. Look for the USD to remain weak throughout the week, staying above the 1.22 to the EUR. Should it break below 120 the weakening may turn into strength. The USD has been weakening from strength at1.07 first reached in March of 2015 from a weak point of 1.4 last seen in April of 2014. The Fundamentals are muddled. In 2014 the EURO was facing banking and alliance troubles. Surely no less than it does now. The US economy is strong. On the other side showing USD weakness today is a US leadership clearly without plans or thoughts of any consequence. This leaves the largest gap in world leadership since WWII. The mantle of world leadership is open to challenge. These are serious matters that will have a visible and therefore tradable opportunity.
Friday's Retail Numbers Showed Growth
Weekly Report - 14/01/2018