• News: Euro CPI, ECB rate decision, US Retail Sales and Jobless Claims
• Earnings: BX(Blackstone) and NFLX(Netflix)

FX Markets:

• US Retail Sales better than expected(0.4% vs 0.3%) and Jobless Claims better than expected as well(241K vs 260K).
• Euro CPI and ECB rate decision both were as expected, no real movement on both of those numbers. US Retail Sales were significantly better than estimated just like all the previous 2 months. The implied chance of a 25bp rate cut is down to 90% for the next meeting(11/7). Right after the number, EUR/USD moved to its recent low(After Yen Carry trade debacle) of 1.0830 while the low of the day was 1.0815. As expected, the range post the data release was fairly tight(1.0825 to 1.0845) with not much volatility.
• GBP/USD was trading between 1.2975 to 1.3015 range during the overnight session with it being all the local highs before the US retail sales post which it went to the lower side of the range and moved in the above mentioned range during the US hours. I would expect it to stay in this range for the next week. Although, if EUR/USD breaks 1.08 within next week then GBP/USD could also slip downwards and trade around 1.2925 and 1.2975.
• USD/JPY broke the 150 barrier on the US retail sales number, although it did come back down to its upper range of 149.6 but expectedly stayed above and closed above 150 with the high being 150.3. I expect it to drift upwards now for the remaining month, as high as 152.5 until BOJ interest rate decision on 10/30.

US Equity Markets:

• Blackstone also outperformed just like other banks with their Private Equity group seeing the most appreciation owing to more deal making. Their shares were up 6% post earnings and closed the day up 6%. Netflix had their best earnings with all the numbers beating the estimates with the standout number being 5.1M subscribers added in last quarter compared to the estimate of 4.5M.
• SPX was up 20 points pre-market on Earnings as well as Semiconductor stocks bouncing back but the ES futures saw minimal to zero reaction on US Retail Sales data which was a little surprising. But at the same time Retail Sales hasn’t impacted the Equities as much as FX. There was some uptick in Consumers stocks after the number but fizzled out very soon. Overall, most of the moves were in Semi conductor and Banks stock which have been the theme for last 2 days. Uber stock price was down while Expedia was up owing to news about Uber bidding to buy Expedia.

Macro View: Still hold the bearish view on Equity Market. Market has been going side ways this week with no real trend. There are a lot of earnings next week from a lot of different industries, some of which are automobile(TSLA, GM), airline(AA, LUV), consumer products(GE, CL) and telecommunication(VZ,T). There are no data release until Next Thursday(10/24) when US PMI is released. The risk is still on the downside because even on one of the best Bank earnings in a while, market still has not appreciated significantly. I think a few bad earnings might lead to a significant drawdown before the election.
PG earnings tomorrow before market open, would be interesting to the growth of household and essentials industry. Currently, 1/3 of my portfolio is in Colgate(CL), one of its competitors and therefore will evaluate to cut my losses or book some profit if we see a big move in this sector.
Overall, expect a tight range for all G10 FX pairs for tomorrow. We have 3 Fed speakers tomorrow 9:30 AM EST onwards, it would be interesting to know their comments on the today’s Retail Sales data. Overall, before the last meeting Powell rhetoric was very bearish in the rate easing cycle but during and after the meeting, his comments were very optimistic. Their main reason of doing 50bp instead of 25bp last meeting was owing to weak job market but the September NFP(10/4) number was significantly better which indicates that the market was not as bad as they thought during last meeting(9/18) and hence when you also add the mixed inflation numbers of last week on top of good Retail Sales as well jobless claims data of today as well US election right at that point, there is definitely more than 10% of no rate cut in next meeting(9/7).

News: AXP and PG before Market Open. 3 Fed Speakers 9:30 EST onwards.

Sources: Marketwatch(https://www.marketwatch.com/), Reuters(https://www.reuters.com/), finviz(https://finviz.com/), fedwatch-tool(https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html)