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USD dollar is trading volatility, US equities moved into the red after US weak retail sales

This news indirectly confirms the fact that in the past few months, the parties have practically not reached any consensus. Despite this, markets continue to trade positively on the optimism of an impending deal, which helped raise stocks by more than 17% from December lows. Yesterday we wrote about the characteristic cyclical process that has been observed recently in the market. Markets are moving under the influence of cyclical and consistently opposite factors. At first, markets are supported by the prospects and hopes of trade agreements, and they move to growth, then disappointment occurs after designating a tough US position and markets are falling. During such a consistent cycle in January, markets grew by more than 10 percent. However, unexpectedly weak statistics changed this sequence and brought the markets to the red zone.

Today, the focus on a block of statistics on the American economy. Yesterday we observed and analyzed figures according to consumer inflation (consumer price index), the figures came out at the level of expectations, but were interpreted by the market in favor of  US dollar. Today, the markets focus on US retail sales and producer prices. As for the information on retail sales, expectations remained positive (+ 0.2% on a monthly basis). However, the numbers were much weaker and disappointed the markets. Markets recorded the biggest decline since 2009.

  • Major retail sales -1.2% per month (expectations + 0.2% per month)

On FOREX today is quite a busy trading day. In European trading, the dollar continued to rise and updated the annual highs. However, with the approach of the American session, and the release of statistics, the US dollar showed signs of weakness, and given the overbought market, may lead to a stronger correction than we saw on Tuesday. European currency spent the first half of the trading session near the 1.1300 mark. Daily minimum levels were designated in area 1.1247, which coincided with the annual minimum. If today or tomorrow (before the market closes), players will be able to return to the market above 1.1300, this will be a positive signal for the formation of a larger-scale correction stronger than we saw on Tuesday.

The gold market has moved back to growth, pushing off from 1302 after yesterday's decline. The weakness of the dollar forms positive expectations for this market. In focus the test is the nearest resistance 1310 and further 1317.

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