Strong US Retail Figures Create New Highs
A strong USD move ahead of the US retail sales figures this afternoon, but one which we noted was more on leveraged buying according to a number of reports out there. Technically, the EUR/USD rejection of 1.2000 and Cable above 1.3600 have been key drivers in this latest move, alongside a USD/JPY rate which has relentlessly pursued a move above 110.00 - now achieved.
From here we not only watch the US data, but also the impact of higher US Treasury yields, and with the benchmark 10yr Note poised above the 3.00% level to test 3.05% level. If we break above here, all eyes will be on the Wall St indices, which had a pretty flat session last night, and recent gains have been comparatively cautious to previous episodes. Nevertheless, both EUR/USD and Cable seem intent on testing their respective lows seen recently - ahead of 1.1800 and in the mid 1.3400's in each case, while USD/JPY resistance kicks in first at 110.25-30 then pre 111.00.
US retail sales data was a touch off expectations, but not enough to derail the USD buying which has played out this morning.
New highs seen across the board, and all it seems on Treasury yields where the benchmark 10yr Note is eyeing a move on 3.05%. EUR/USD has now tested under 1.1875, but there is a cluster of demand seen at 1.1850-20 lower down, and we anticipate this will be strong given the impromptu nature of the USD return today.
Cable is trying to test below 1.3500, and here we see the buyers set to cause some 2 way flow below the figure. USD/JPY is now trying to press towards initial resistance at 110.30, but we note caution ahead of the NYSE open today, as stocks may react to higher Treasury yields from here.