Onto Retail Sales, PBOC Emerges
Ashraf Laidi | Oct 17, 2021 12:41AM ET
by Adam Button
The surge in risk appetite and copper prices started in Asia on Thursday and there might be a reason for that. The PBOC did issue a statement vowing to support Evergrande (HK:3333), but nothing about cutting the RRR or adding stimulus.
GBP was the strongest followed by NZD, while JPY was the weakest. Whole US retail sales are due up next, with the control group expected to rise 0.5% from the prev 2.5%
Copper is a particularly notable economic barometer and it's turned sharply higher in the past week, rising to $4.63 from $4.25, and hitting the highest since May. It comes on a broader reflation trade (ex bonds) and improving risk sentiment.
Perhaps that's all there is to it but it's worth keeping a close eye on China at the moment. It's more of a question of 'when' they add more stimulus rather than 'if.' There was chatter of a cut in the RRR or a fresh MLF on Friday and that's been percolating for a few days.
If China turns on the taps, it will add another leg to the commodity currency rally, particularly against the yen. We've highlighted those crosses recently and they continued to break out with CAD/JPY busting an old triple top from 2017, 2018, and 2021 on Thursday in a rally to the best levels in six years.
At the same time, we're gaining confidence daily that COVID is in terminal decline. Of course, there's always the chance of another wave and we've not virologists but cases are falling almost everywhere at the moment and vaccination continues to rise.
On Friday, the US reports on September retail sales. We see this as somewhat of a free call option. The consensus is -0.2% m/m and +0.4% on the control group. Those are modest numbers but September was a challenging month for COVID. If the data undershoots, it will likely be brushed aside or further push yields down. While if it's stronger it will point to a ready-to-spend consumer ahead of the holidays.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.