Dollar Falls, Equities Rip on Record Retails Sales

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Dollar Falls, Equities Rip on Record Retails Sales

JUNE 16, 2020

What has been jokingly referred to the “kangaroo market” was on full display yesterday at the expense of the U.S. dollar.

Overview

The safe-haven greenback was up across the board the first half of the day yesterday and equity market were in the red on fears of a second wave loomed over the market.  But risk sentiment “hopped” back quickly in the afternoon as the Fed announced the commencement of their plan to buy corporate debt as part of their expansive monetary policy.

The improved risk mood spread overnight with Asian stocks rising over 3% and European equities surging over 2%.  At the time of writing Dow Futures are up over 900 points and American shares look to continue their march higher.

The economic dock will give traders more reasons to turn up risk sentiment.  Retails sales gained a whopping 17.7% in May, following an unprecedented, all-time low crash of 16.4% in April.  Today’s impressive print ends three months of retail sales contractions and represents the biggest monthly increase on record.  To be clear, the biggest monthly gain followed the biggest monthly contraction.

Later, industrial and manufacturing production will cross the wire.  Attention will then shift to Federal Reserve Chairman Jerome Powell’s testimony before the Senate Banking Committee.  He is expected to maintain his bearish outlook for the economy and defend the banks current aggressive policy.

What to Watch Today…

  • Powell Testimony at 10 a.m.

Complete Economic Calendar can be found here.

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EUR

The Euro rose yesterday during the turnaround in risk sentiment but was unable to take advantage of dollar weakness today.  The Euro failed to gain even as German investor sentiment rose.  The ZEW gauge showed the current conditions in Germany advanced in June and expectations for the next six months continued to improve.

GBP

The British pound popped higher against the U.S dollar and continued its momentum overnight as the tone of Brexit talks improved yesterday, giving traders the impetus to push GBP/USD higher.  Prime Minister Boris Johnson set a rather ambitious goal of an end of July deadline to completing a trade deal.

The sterling shook off data that showed U.K. jobless claims had doubled to almost three million Brits during the lockdown.

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