Daily Market Update

The headline figure rose 3% compared with the 2% expected, and control group retail sales rose a surprise 1.7% compared with the 0.7% expected. The prior month’s numbers were also revised upward to show less of a contraction.

On this news, the Bloomberg Dollar Spot Index rose as much as 0.8%, and the greenback has strengthened across all major currencies into the morning’s session. Coupled with yesterday’s higher-than-expected CPI reading, investors are cautiously optimistic about the possibility of a “no-landing” economic scenario with no recession and re-accelerating growth.

Ultimately, today’s upside surprise once again raises the risk of a more hawkish Federal Reserve and in turn, a stronger dollar as the interest rate backdrop becomes even more unforgiving for risky assets and equities.

What to Watch Today…

• No major economic events are scheduled for today
• Monex USA Online is always open

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AUD ⇓

The Australian and New Zealand Dollars fell against the buck this morning in tandem with most majors on hot US retail sales prints. As Australia has fared slightly better than the rest of the world in terms of inflation, there is a chance that the Royal Bank of Australia will end its tightening cycle before the Federal Reserve with a lower terminal rate. The chance of this divergence between the two central banks has driven Aussie prices down nearly a percent and a half this morning.

 

GBP ⇓

Pound Sterling weakened overnight and into this morning as inflation data finally showed some easing from the merciless price increases seen across the UK in the last two years. Though still five times the Bank of England’s target inflation rate, the monthly reading of 10.1% represents a 1% decrease from the record-high inflation rate seen in October.
 
Investors are now betting the central bank’s key rate peaks at 4.5% this summer, compared with bets on a 5% peak rate just two months ago. This represents a ray of hope for Prime Minister Rishi Sunak, who has promised to cut inflation in half this year.