Disappointing Retail Sales Weakens USD Further May 14, 2015
US Retail Sales Almost Goes Negative
Although the disappointment in the Retail Sales data yesterday does show that the US is closer to recession than many might think (I am not one of them, my thoughts are we never left) whats a little more telling is the Import and Export Price Indexes. Going negative on both of those not only shows that Americans are not buying foreign goods but it also means that foreigners are not buying American goods. Hence we have to lower prices in order to get sales. Sounds more like deflation to me. Now thats not to say that the data cant improve and it is only one release. However at this point things are not looking good. Considering the race to the bottom has been in full throttle mode for quite some time the probability is much higher the bad data will continue. Until of course, the Fed starts printing again. Then as usual they will have to print $2 for every 1$ of so called recovery, and the circle jerk continues.
EUR/USD To Test May Highs
As usual I am never happy with pushes that blow the ADR by 40+ pips so although I will be bias for the third push on the EUR/USD today I will also be cautious of the stop run to the monthly highs around 1.1391. Having said that if they didnt find any liquidity when it tested the hourly candle high then it should have pulled back further than it did last night. The level that has the most potential during the London session is at the Asian lows of 1.1339 but it would be better to see them widen the range first. In order to consider a short in this situation I will need one of those “screaming at me” entries at the monthly high.
GBP/USD Extends Push To Test December 2014 Highs
The GBP/USd came withing 15 pips of hitting the December 2014 highs yesterday. Today I expect that will happen. The pair is still slowing down but still has been showing strong pushes for over 130 pips as of yesterday even if the chart is deceiving. Again it looks like the conviction is to the upside with the topping formation from Tuesday being negated. I will be more open on direction today since the momentum is still slowing but prefer to be long. The best level is down at 1.5703 but the Asia lows have potential if they widen the Asian range a bit more. Otherwise it will take some convincing to get me short at yesterdays highs preferring to see stiff rejection at the 1.5784 level and hourly close below yesterdays high.
EUR/JPY Second Push Up
At the risk of sounding like a broken record the EUR/JPY has made the second push with the EU again. It also held above the 135.13 level showing some conviction. I will have a bias for the long today looking at the 135.13 as the best long entry but if we do get some conviction above yesterdays highs and the EU is pushing as well then I will consider the long at the daily 135.28 during the London session. I wont be considering a short unless something dramatic is happening on the EU that I miss.
Forex News Today
News releases are non existent during the London session today and with half of Europe taking the day off we may not get much movement. However London will still be around so there is still a chance we get decent movement today.
The only big news is US PPI data and Unemployment Claims. I expect there is a better chance for a disappointment in the PPI data while the Claims data will likely be ignored on a small miss while any pop above 300K will be USD negative and give them reason to blow the top off on the EU and GU. Any drop below zero on PPI will just add fuel to the move.
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