Dollar Mixed after Shrugging Off Retail Sales, Euro Trying to Recover

Economic data released today are generally ignored by the markets. Dollar is mixed, paying little attention to US retail sales. Euro recovers mildly today on short profit taking ahead of weekend. But it remains the weakest one for the week. Swiss Franc and Yen are trading as the next weakest so far. Sterling continues to trade as the strongest one despite mild retreat today. Aussie and Kiwi are so far the next strongest for the week.

Technically, 1.0888 minor resistance in EUR/USD is a focus. Break will indicate temporary bottoming and further recovery could be seen initially this week. USD/CAD seems to be extending the corrective fall from 1.3329 and would target 55 day EMA at 1.3182.

In Europe, FTSE is flat for the moment. DAX is trading up 0.19%. CAC is down -0.11%. German 10-year yield is down -0.0204 at -0.403. Earlier in Asia, Nikkei dropped -0.59%. Hong Kong HSI rose 0.31%. China Shanghai SSE rose 0.38%. Singapore Strait Times closed flat. 10-year JGB yield dropped -0.0007 to -0.032.

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US retail sales rose 0.3%, ex-auto sales rose 0.3%

US retail sales rose 0.3% to USD 529.8B in January, matched expectations. Ex-auto sales rose 0.3% mom, below expectation of 0.4% mom. Ex-gasoline sales rose 0.3% mom. Ex-auto, ex-gasoline sales rose 0.4% mom. Import price index rose 0.0% mom in January, above expectation of -0.2% mom.

Eurozone GDP grew 0.1% qoq in Q4, employment rose 0.3% qoq

Eurozone GDP grew 0.1% qoq in Q4, matched expectations. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 0.9% yoy. EU 27 GDP grew 0.1% qoq, 1.2% yoy. Employment grew 0.3% qoq above expectation of 0.1% qoq. EU 27 employment grew 0.2% qoq.

Trade surplus widened to EUR 22.2B in December, above expectation of EUR 19.1B.

German GDP stalled in Q4, mixed signals in domestic demand

Germany GDP was flat in Q4, below expectation of 0.1% qoq. For the year of 2019, the economy grew 0.6%, both price and seasonally adjusted. Statistisches Bundesamt said there were “mixed signals” regarding domestic demand. Both final consumption expenditure of both households and government “slowed down markedly” after a strong Q3. On the other hand, trends “diverged” for fixed capital formation. Foreign trade slowed down the economy, with exports slightly down on the quarter while import increased.

Also released, Swiss PPI came in at 0.0% mom, -1.0% yoy in January, versus expectation of 0.0% mom, -1.5% yoy.

New Zealand BusinessNZ PMI rose to 49.6, relatively decent in context of global ructions

New Zealand BusinessNZ Performance of Manufacturing Index rose 0.4 to 49.6 in January, staying in contraction region. BNZ Senior Economist, Craig Ebert said that “in the context of the latest global ructions – this time related to the COVID-19 virus – January’s PMI could arguably be read as a relatively decent outcome. At the same time, it is surely too early for the PMI to capture the economic consequences of the virus”.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9772; (P) 0.9784; (R1) 0.9806; More

USD/CHF’s rebound from 0.9613 is still in progress and intraday bias remains on the upside. Next target is 38.2% retracement of 1.0237 to 0.9613 at 0.9851. Reactions from there would unveil whether it’s just a corrective move, or reversing near term trend. On the downside, however, break of 0.9741 minor support will bring retest of 0.9613 low instead.

In the bigger picture, medium term outlook remains neutral as USD/CHF is staying sideway trading started from 1.0342 (2016 high). Fall from 1.0237 is a leg inside the pattern and could target 0.9186 (2018 low). In case of another rise, break of 1.0237 is needed to indicate up trend resumption. Otherwise, more sideway trading would be seen with risk of another fall.

Economic Indicators Update

GMTCcyEventsActualForecastPreviousRevised
21:30NZDBusiness NZ Manufacturing Index Jan49.649.3
04:30JPYTertiary Industry Index M/M Dec-0.20%-1.60%1.30%1.40%
07:00EURGermany GDP Q/Q Q4 P0.00%0.10%0.10%
07:30CHFProducer and Import Prices M/M Jan0.00%0.00%0.10%
07:30CHFProducer and Import Prices Y/Y Jan-1.00%-1.50%-1.70%
09:00EURItaly Trade Balance (EUR) Dec5.01B5.23B4.87B4.89B
10:00EUREurozone Trade Balance (EUR) Dec22.2B19.1B19.2B
10:00EUREurozone GDP Q/Q Q4 P0.10%0.10%0.10%
10:00EUREurozone Employment Change Q/Q Q4 P0.30%0.10%0.10%
13:30USDRetail Sales M/M Jan0.30%0.30%0.30%0.20%
13:30USDRetail Sales ex Autos M/M Jan0.30%0.40%0.70%0.60%
13:30USDImport Price Index M/M Jan0.00%-0.20%0.30%
14:15USDIndustrial Production M/M Jan-0.10%-0.30%
14:15USDCapacity Utilization Jan76.90%77.00%
15:00USDMichigan Consumer Sentiment Index Feb P99.799.8
15:00USDBusiness Inventories Dec0.10%-0.20%