Wakeup Call: US Retail Sales Continue To Show Contraction

Daily Forex Fundamentals | Written by Saxo Bank | Jan 15 09 07:57 GMT |

US retail sales continue to show contraction. Monthly changes have now shown contraction for 6 straight months. Equities will trade lower on this. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment EC Euro-Zone CPI YoY (DEC) 10:00 1.6% 2.1% Disinflation? US Initial Jobless Claims (JAN) 13:30 503 467 US Empire Manufacturing (JAN) 13:30 -25 -25.76 What's going on? Moody's predicts that end of year junk bond default rates will jump to 15.3% (US) and 18.3% (EU). The 1933 US equivalent was 15.4%. US Retail Sales continue to show contraction. Monthly changes have been negative for 6 straight months. YoY down by 7.6%. TrimTabs' estimates show that AuM in hedge funds have dropped by 48% (from $1.92T) in 2008 alone. They also estimate that 81% of all HF were performing negatively in 2008. HFR states that overall HF performance has been negative by 18.3% in 2008. Redemptions are still of a concern and our estimates indicate that EM shares are among the most likely candidates for continued unwinding. FX FX Daily stance Comment EURUSD - EUR negative outcome to ECB? Sell rallies for 1.3000 test. 1.3210 first resistance. EURJPY 0/- 118.00 is first resistance. Nervous trading possible. 115.90 next objective lower. USDJPY 0 No momentum developing. 89.20 first resistance. 88.60 first support GBPUSD 0 Could try back toward 1.4715 today. GBP may be resilient. 1.4600 is first support. EURGBP - If ECB is EUR negative, could fall below 0.9000. Short with stops >0.9060 Equities Equities Daily stance Comment DAX - Sell at the break of 4380 for a test of 4304. Keep a stop-loss at 4421. FTSE - Sell at the break of 4100 for a test of 3956. Keep a stop-loss at 4148. S&P500 0/- Nasdaq100 0/- Nikkei225 0/- Futures Commodities Daily Stance Comment Gold (XAUUSD) - Sell the break of 807.50 and keep a stop above 832. Target 776. Silver (XAGUSD) - Sell around 10.60 with a stop at 10.70. Target 10.15. Oil (CLG9) - Sell intraday bounces with a stop above 37.52. Target a test of 35.52. FX Options FX-Options Comment EURUSD Differing opinions about the ECB's rate decision tomorrow will likely lead to increased volatility as observed in the market with low delta options bid and ATMs offered. USDCHF Vols sold along the curve. The spread between EURUSD and USDCHF has begun to widen again which suggest spot is headed higher. EURJPY Vols remain bid along the curve. Good chance this trend will continue with recent developments regarding Italy and Ireland to keep skews well supported. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. 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