A more subdued end to the week for a lot of assets with the US dollar not really making progress out of the previous week's range. There had been a higher weekly print, but the bears appear to be in control of the greenback. Good news from across the Atlantic with a possible travel restriction being lifted for UK travellers to the US and mixed data to end the week as retail sales and sentiment lose out to good earnings season flows.
Market Wrap
The pound and yen stayed strongest versus weakest respectively all day. The overall tone of the market remained risk-on so equities rose higher but the strength in the Swiss franc and TLT remained elevated enough to minimize the exuberance. For instance, Oil was up and gold was lower but the CAD and Aussie were relatively weak today on the USDCAD and AUDUSD charts. There was little tier-1 data though we did learn that US retail sales for the month of September rose 0.7% monthly to $625.4 billion.
This represents an increase of 13.9% over last year. Over the past month, retail trade sales surged 0.7% while year-over-year they rose 12.2%. Gasoline stations posted the largest annual increase, a jump of 38.2% compared with 2020, and a jump of 1.8% compared with last month.
The University of Michigan released a preliminary report before the London close showing a decline in consumer confidence in October compared to the previous month. Consumer Sentiment measured 71.4, down 1.9% monthly and 12.7% from October 2020.
In October, the Current Economic Conditions Index fell 2.7% from September and 9.3% from last year. Consumer expectations dropped to 67.2, down 1.3% month-on-month and 15.2% when compared with October 2020.
The report stated: "The Delta variant, supply chain shortages, and reduced labour force participation rates will continue to dim the pace of consumer spending into 2022. There is another, the less tangible factor that has contributed to the slump in optimism: confidence in government economic policies has significantly declined during the past six months,"
Dow Jones Industrial Average futures rose today, one day after the 30-stock benchmark broke higher with a nearly 1.6% surge. There’s a good chance for weekly gains for the three main US stock indices but the Nasdaq needs to find another 2.59%. United States oil prices rose and printed above $82 a barrel, marking a seven-year high. A rising 10-year Treasury yield pushed 1.54% but the US dollar index remains lower for the week.
In Premarket trading, Goldman Sachs rose over 1% ahead of the bank's quarterly report. Financial stocks had already been performing well during this earnings week. Goldman Sachs Group achieved $13.61 billion in revenue in the third quarter, up 26% from the previous year.
Newswires are reporting that Washington will end the travel ban for the United Kingdom on November 8. Travellers who have been fully vaccinated and got tested for COVID-19 up to three days before the trip will be able to fly to the United States for the first time after 18 months. In contrast, fully vaccinated US visitors have already been allowed into London. Ultimately this will be great for the travel, tourism, business industries. With the likes of Heathrow and Gatwick welcoming the return of busier plane schedules. I’ll be keeping an eye on the International Consolidated Airlines (IAG) share price which is at an important pivot level.
This news is also great for the pound and today's price action looks very likely to close above the daily 200 ema and next week could see cable break out of the descending channel that peaked in May 2021.