US retail sales expected to rise

US equities retreated and the dollar rallied against most of its peers ahead of retail sales tonight.

The US retail sales figure is expected to rise for a fourth consecutive month, up 0.3% against the prior month according to the Bloomberg survey. It shows Americans are feeling confident with their household wealth from rising home prices and stocks.

A strong retail sales figure would add to the forward expectation of a tapering in September. One could argue the event is fully priced-in, however, knowing how markets can get skittish, we should expect volatility when this occurs.

In Asia, Japan’s GDP missing estimates yesterday sent the Nikkei lower and the USD/JPY higher. It raises questions over whether the BOJ will step in and provide additional monetary stimulus and whether the consumption tax hike will go ahead as planned? Investors’ expectations in the BOJ’s aggressive monetary policy are waning. Minutes of the BOJ’s 10-11 July meeting will be closely watched today for any indication of further fiscal action.


Commodities are holding up firm on optimism that the Chinese economy will bolster demand for raw materials. Copper futures for September delivery are trading slightly higher this morning after Japan’s data dampened prices yesterday. Copper has gained 4.7% since the beginning of the month. Technically, copper has broken out of a wedge and shows momentum on the upside. Its support sits at $320 and resistance at $335.

Brent and WTI prices inched higher after BP announced the “gas turbine powering a compressor at Ula broke down” which affects delivery in the North Sea. Technically, Brent has broken out of a wedge, a bullish indicator. Staying above the support level of $108 would indicate testing resistance at $110.

WTI is testing its support level of $106, price action today should determine whether it can stay above this level and test $108 resistance.

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