The dollar is weakening especially in the early US session after retail sales data showed another record decline in April. Equity futures are also tumbling after the news. Gold rides especially on greenback sales, and it is set to resume a bigger trend. . Nevertheless, New Zealand, Australian Dollar and Sterling for the day are still the poorest performers. Yen, Swiss Franc and Euro are the strongest,
Technically, Gold is looking for 1747.75 resistance. A crucial break that will target 61.8% projection from 1160.17 to 1703.28 from 1451.16 at 1786.80. Some further acceleration could occur if this major obstacle is overcome. Sterling’s weakness is also worth keeping an eye on as the EUR / GBP resumes the recent rebound from 0.8670 resuming after a short withdrawal. Reactions to 0.8987 short term resistance would reveal the underlying strength of the cross.
In Europe, the FTSE is currently up 0.65%. DAX has risen 0.69%. CAC is down -0.20%. The German 10-year yield is down -0.016 at -0.556. Earlier in Asia, Nikkei rose 0.62%. Hong Kong HSI fell -0.14%. China Shanghai SSE fell -0.07%. Singapore Strait Times rose 0.05%. Japan’s 10-year JGB yield increased 0.0007 to -0.004.
US retail sales fell a record -16.4% in April
US retail sales dropped a record -16.4% mother in April to $ 403.9B, worse than expected to -10.0% mother. That’s also almost double the -8.3% drop in March, which was the pre-worst reading since 1992. Ex-auto sales fell -17.2% mom, much worse than expected -8.6% mom. Sales from former gasoline fell -15.5% mother. Ex-car, ex-gasoline sales fell -16.2% mother.
The Empire State Manufacturing Index also rose sharply from -78.2 to -48.5 in May, much better than expected at -65.0.
Very limited progress made following disappointing Brexit negotiations
British Brexit chief Brexit negotiator David Frost said “very limited progress” was being made on the “most significant outstanding issues” with the EU following the conclusion of the latest round of negotiations. He also warned that if the EU continues its “new and unbalanced proposals on the so-called equal terms”, two parties will not be able to reach an agreement.
“We are in dire need of a change in the EU strategy for the next round,” Frost added. England. continues to work hard to find a deal as long as there is a constructive process in place, and continues to believe that this is possible. “
On the other hand, EU chief Brexit negotiator Michel Barnier said the third round of Brexit negotiations was “disappointing”. But he insisted, “We will not negotiate our values for the benefit of the UK economy.”
Eurozone GDP fell -3.8% in Q1, EU contracted -3.3%
Eurozone GDP contracted -3.8% qoq in Q1. EU GDP increased by -3.3% qoq. Both are the worst declines since the series began in 1995. Annually, Eurozone GDP rose -3.2% yyyy, while EU GDP rose -2.6% yyyy, both worst since Q3 2009. Employment in fell -0, 2% qoq in both the Eurozone and the EU, the worst decline since 2013.
The German recession expected to accelerate in Q2, but the recovery began in May
Germany’s GDP shrank -2.2% qoq in Q1, slightly below projected -2.0% qoq, worst for more than a decade. When Q4 figures were revised down to -0.1% qoq, the country was already in a technical recession with two straight quarters of contraction.
The contraction is expected to accelerate in Q2, with economists expecting a -10% decline in GDP. But the German Ministry of Economy sounded relatively optimistic. It said in an e-mail statement: “Recovery began with a cautious lifting of the shutdown in early May. But this process will take longer due to the continuation of the corona pandemic. “
China’s industrial production grew again, but retail sales contracts
China’s industrial output rose 3.9% yoy in April, above expectations to 1.5% yoy. It is the first expansion read this year as activity returned to normal from the coronavirus pandemic. However, consumption remained weak as retail sales rose -7.5% yoy in April, which was in line with expectations. That’s already better than the -15.8% drop in sales in March. Construction investments increased by -10.3% ytd this year in April, worse than expected at -10.0%.
Suggested reading: More need to support China’s gradual economic recovery
USD / JPY Mid-Term Outlook
Daily pivots: (S1) 106.89; (P) 107.13; (R1) 107.48; More ...
The USD / JPY extends the retreat from 107.76 temporary peak and intraday bias remains neutral first. Expectations remain unchanged that the correctional decline from 111.71 should have ended with three waves down to 105.98. Further increase is expected as long as 105.98 support holds. On the upside, the 107.76 breach will return the bias to the head for 109.38 resistance first. However, a break of 105.98 will dampen our bullish outlook and bring a deeper decline.
In the bigger picture, the entire decline from 118.65 (Dec 2016) at this point continues to show a corrective look with well channeling. There is no clear sign of completion yet. Breaks of 101.18 will target 98.97 (low in 2016). Meanwhile, a sustained break of 112.22 should confirm the end of the decline and turn the outlook to bullish for 118.65 and above.
Updating economic indicators
|22:30||NZD||BusinessNZ Manufacturing Index mar||38||53.2||53.7|
|23:50||JPY||PPI Y / Y Apr||-2.30%||-1.60%||-0.40%|
|02:00||CNY||Retail Y / Y Apr||-7.50%||-7.50%||-15.80%|
|02:00||CNY||Industrial production Å / Å Apr||3.90%||1.50%||-1.10%|
|02:00||CNY||Construction investment YTD Y / Y Apr||-10.30%||-10.00%||-16.10%|
|08:00||EUR||Germany GDP Q / Q Q1 P||-2.20%||-2.10%||0.00%||-0.10%|
|09:00||EUR||Eurozone trade balance (EUR) Mar.||23.5B||17.2B||25.8B|
|09:00||EUR||Eurozone GDP Q / Q Q1 P||-3.80%||-3.80%||-3.80%|
|09:00||EUR||Eurozone Employment Change Q / Q Q1 P||-0.20%||-2.00%||0.30%|
|half past one||CAD||Foreign Securities (CAD) mar||-9.78B||20.61B||19.42 B|
|half past one||USD||Empire State Manufacturing Index May||-48.5||-65||-78.2|
|half past one||USD||Retail M / M Apr||-16.40%||-10.00%||-8.70%||-8.30%|
|half past one||USD||Retail ex cars M / M Apr||-17.20%||-8.60%||-4.50%||-4.00%|
|13:15||USD||Industrial production M / M Apr||-11.60%||-5.40%|
|13:15||USD||Capacity utilization Apr||65.00%||72.70%|
|14:00||USD||Michigan Consumer Sentiment Index May p||68||71.8|
|14:00||USD||Business Inventory Mar||-0.50%||-0.40%|