US stocks extend weekly gains as retail sector lags
US stocks ended the day higher yesterday as investors cheered the progress of US and China talks. They also appreciated Jerome Powell’s statement that the Fed was prepared to wait and see before making any more changes to interest rates. The biggest underperformer were retail stocks, which were weighed down by reports of weaker retail sales. In total, the biggest retailers lost more than $34 billion of value. Macy’s was the biggest loser, shedding more than 18% of value.
Today, traders will focus on key data from the United Kingdom and the United States. The UK will release key economic numbers. The monthly GDP change is expected to remain at 0.1%. The industrial production is expected to shrink by 0.7% while the manufacturing production is expected to shrink by 0.7%. On a MoM basis, the manufacturing production is expected to rise by 0.4%, which will be better than the 0.9% in the previous month. Traders will also focus on key Brexit developments.
From the United States, investors will receive key inflation numbers. The headline CPI for December is expected to fall to 1.9% after rising by 2.2% in November. On a MoM basis, the CPI is expected to contract by 0.1%. The core CPI, which excludes the volatile food and energy products is expected to remain unchanged at 2.2%. Real earnings are expected to increase by 0.3% in December after contracting by 0.1% in November.
The EUR/USD pair rose today after declining sharply during the American session. The pair reached a high of 1.1530. As shown in the four-hour chart below, the pair has been making big upward and downward moves in the past few weeks. The current price is above the 21-day and 42-day EMAs as the Average True Range indicator declines. There is a likelihood that the pair will continue with the upward trend as investors expect the Fed to halt rate hikes.
The GBP/USD pair was little moved in the Asian session as traders waited for key economic data from the UK. The pair is trading at 1.2765, which is where it ended the day at yesterday. The level is also along the key moving averages as the RSI remains at a neutral level of 50. The pair will likely react to the economic data from the UK and move in either direction today. The key levels to watch will be 1.2700 and 1.2800.
The USD/CAD pair declined in overnight trading as it attempted to continue with the previous downward trend. It is now trading at 1.3200, which is lower than the 21-day and 42-day EMAs. The Force index remains along the neutral level. Today, traders will focus on news from the United States. If inflation weakens, the pair will likely continue to move lower.