Markets Staying Quiet, Canada and UK Retail Sales Ignored

The financial markets are generally quiet today. Stocks are slightly down by losses are limited. Retail sales data from Canada and UK are largely ignored. Commodity currencies are the strongest ones for now. Yen, Dollar and Euro are the weaker ones. There news of shelling in Ukraine east by Russian-backed separatists and there is still no clarity on the overall situation and development. Traders are likely to continue to hold their bets for now.

In Europe, at the time of writing, FTSE is down -0.05%. DAX is down -1.01%. CAC is down -0.19%. Germany 10-year yield is down -0.020 at 0.210. Earlier in Asia, Nikkei dropped -0.41%. Hong Kong HSI dropped -1.88%. China Shanghai SSE rose 0.66%. Singapore Strait Times dropped -0.37%. Japan 10-year JGB yield dropped -0.0034 to 0.220.

Canada retail sales dropped -1.8% mom in Dec, to rebound by 2.4% in Jan

Canada retail sales dropped -1.8% mom to CAD 57.0B in December, better than expectation of -2.1%. Sales were down in 8 of 11 subsectors, representing 62.9% of retail trade. Excluding gasoline stations and motor vehicle and parts, sales dropped -2.4% mom.

For Q4, retail sales were up 1.7%, marking its second consecutive quarterly increase.

Advance estimate suggests sales rose 2.4% in January.

UK retail sales rose 1.9% mom in Jan, ex-fuel sales rose 1.7% mom

UK retail sales volume grew 1.9% mom in January, well above expectation of 1.0% mom. Ex-fuel sales rose 1.7% mom, above expectation of 1.2% mom. Comparing with the sale month a year earlier, retail sales rose 9.1% yoy while ex-fuel sales rose 7.2% yoy.

Comparing with prepandemic level in February 2020, retail sales was 3.6% above that level while ex-fuel sales was 4.4% above.

Japan CPI core slowed to 0.2% yoy in Jan, CPI core core dropped to -1.1% yoy

Japan all item CPI slowed from 0.8% yoy to 0.5% yoy in January, below expectation of 0.6% yoy. CPI core (all item less fresh food) dropped from 0.5% yoy to 0.2% yoy, below expectation of 0.3% yoy. CPI core-core (all item less fresh food and energy), dropped from -0.7% yoy to -1.1% yoy, below expectation of -0.7% yoy.

Finance Minister Shunichi Suzuki said recent prices rises were “driven mostly by increases in energy costs”, though forex moves also has had some impact. He added, “if inflation rises before improvement in job market, wage hikes kick in, that could affect consumption.”

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1329; (P) 1.1357; (R1) 1.1391; More…

Range trading continues in EUR/USD and intraday bias remains neutral. With 1.1265 minor support intact, further rally will remain mildly in favor. On the upside break of 1.1482 will target 38.2% retracement of 1.2348 to 1.1120 at 1.1589 next. Sustained break there will argue that whole fall from 1.2348 has completed too and target 61.8% retracement at 1.1879. On the downside, however, break of 1.1265 support will dampen this bullish view and bring retest of 1.1120 low instead.

In the bigger picture, the decline from 1.2348 (2021 high) is seen as a leg inside the range pattern from 1.2555 (2018 high). Sustained trading above 55 week EMA (now at 1.1613) will argue that it has completed and stronger rise would be seen back towards top of the range between 1.2348 and 1.2555. However, firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next.

Economic Indicators Update