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• Prior 0.3%
• Business inventories 0.4% vs 0.3% expected
• Retail inventories ex-autos 0.5% vs 0.2% last month

Sales:

• July distributive trade sales and manufacturers’ shipments: $1,880.7 billion
• Increase from June 2024: 1.1%
• Increase from July 2023: 2.9%

Inventories:

• July manufacturers’ and trade inventories: $2,574.9 billion
• Increase from June 2024: 0.4%
• Increase from July 2023: 2.5%

Inventories/Sales Ratio:

• July 2024 ratio: 1.37
• July 2023 ratio: 1.37

The Inventory to sales ratio is back within the pre-Covid range after the Covid volatility in 2020 and 2021 (and into early 2022). That seems to be the sweet spot.

This article was written by Greg Michalowski at www.forexlive.com.

• Prior was 39
• Current sales 45 vs 44 prior
• Prospective sales 27 vs 25 prior

This is a sign that lower rates are starting to have some effect.

This article was written by Adam Button at www.forexlive.com.

The major US indices are trading higher at the start of the trading day. Retail sales were better than expectations. That might mean the Fed might lean toward a 25 basis points but it also means that the economy is not as bad as hoped.

The Dow industrial average closed at a record level yesterday and is extending that record today. The S&P all-time high close comes in at 5667.21. The high price has reached 5659.83 so far today. The NASDAQ index is up the most with a gain of 0.67% at the open, but remains well below its high closing level at 18647.45 (the high price today has reached 17744.69 so far).

A snapshot of the market five minutes into the open is showing:

• Dow industrial average +120.35 points or 0.29% at 41742.43.
• S&P index up 20.36 points or 0.36% at 5653.45.
• NASDAQ index up 112.36 points or 0.64% at 17704.48

The small Russell 2000 is up 17.93 points or 0.82% at 2207.10

Looking at some of the large-cap stocks (and others):

• NVidia is up 0.98%
• Meta is up 1.45%.
• Apple is down -0.38%. Analysts are saying that preorders of the new iPhone below expectations
• Amazon is up 1.88%
• Microsoft is up 1.62%. MSFT announced a 10% increase in its quarterly dividend and approved a new $60 billion stock buyback program.
• Tesla is up 2.32%

Intel announced a “slew of stuff” after close yesterday. It’s shares were up over 8% in premarket trading but is now up only 2.58% at $21.49.

This article was written by Greg Michalowski at www.forexlive.com.

• Prior was -0.6% (revised to -0.9%)
• Capacity utilization 78.0% vs 77.9% expected
• Prior utilization 77.8% (revised to 77.4%)
• Manufacturing output +0.9% vs +0.3% expected
• Prior manufacturing output -0.3% (revised to -0.7%)

The negative revisions take some of the shine off this report but it’s still a a good one. In July, Hurricane Beryl likely depressed production and this is the rebound but smoothing it over, you’re left with a healthy number.

Speaking of hurricanes, the Atlantic is looking quiet at the moment and we’re at the peak of hurricane season.

This article was written by Adam Button at www.forexlive.com.

The US retail sales report wasn’t a game-changer for tomorrow’s FOMC decision but it offers some angst for those who are expecting a 50 basis point cut.

Sales rose 0.1% compared to -0.2% expected in a sign that the consumer is just fine. The control group, which excludes volatile components on gasoline, autos and building materials, rose 0.3% in line with estimates but the prior was was bumped up by 0.1 pp.

The market reaction was to buy the US dollar and sell bonds but only modestly. EUR/USD fell to 1.1122 from 1.1140 while USD/JPY rose to 141.10 from 140.70.

The uneasy market reaction could spread to stocks, which have held up so far. S&P 500 futures are up 24 points, or 0.4% ahead of the open.

Fed pricing is still at 67%, the same as it was before the report.

This article was written by Adam Button at www.forexlive.com.

• Prior month 2.5%(it came in as expected)
• CPI MoM -0.2% vs 0.0% expected.
• Prior MoM +0.4%

Core measures:

• CPI Bank of Canada core YoY 1.5% vs 1.7% last month
• CPI Bank of Canada core MoM -0.1% versus +0.3% last month
• Core CPI MoM SA 0.1% versus 0.1% last month
• Median 2.3% versus 2.2% estimate. Last month 2.4%
• Trim 2.4% versus 2.5% estimate. Last month .7%
• Common 2.0% versus 2.2% last month

The initial reaction is a run to the upside for the USDCAD. The USDCAD went from 1.3590 to the current rate of 1.3610. There is resistance near a swing area between 1.3615 1.3622. The 200 bar moving average on a four hour chart is just above that at 1.3624 in the 38.2% retracement of the move down from the August high is at 1.3633. The price needs to get above all those measures to increase the bullish bias from a technical perspective.

With retail sales in the US at least with the headline moving higher than expected, it puts into question the basis points or 25 basis points at the Fed meeting tomorrow (should be positive for the USD). For the Bank of Canada, inflation is coming down while unemployment is going higher (6.6% unemployment rate was the highest ex the Covid period, since 2017)

This article was written by Greg Michalowski at www.forexlive.com.

• Prior -0.2%
• Retail sales $710.8 billion versus $709.7 billion prior
• Retail sales +0.1% versus -0.2% expected
• Prior m/m sales +1.0% (revised to +1.1%)
• Retail sales YoY +2.1% versus +2.7% prior
• Ex autos +0.1% versus +0.2% expected
• Prior ex autos +0.4% prior
• Control group +0.3% versus +0.3% expected
• Ex autos and gas +0.2% versus +0.4% prior

Heading into the report, market was putting a 63% probability on the chance of a 50 bps Fed cut, that’s up to 67% afterwards but the numbers have been choppy. In contrast, US 2-year yields rose to 3.59% from 3.58% on the data.

There are no big surprises here but the numbers are a touch on the strong side at first blush.

Some details:

• Food services & drinking places 0.0% versus 0.2% prior
• Nonstore retailers +1.4% versus -0.4% prior
• Gasoline stations -1.2% versus 0.5% prior
• Building materials +0.1% vs +0.8% prior
• Clothing stores -0.7% vs +0.1% prior
• Motor vehicle & parts dealers -0.1% vs +4.4% prior

This article was written by Adam Button at www.forexlive.com.

• Prior was 279.5K (revised to 279.8K)

There is some measure of give-back here after a strong July number but I can confidently say that the pipeline in Canada is drying up as the investor class has abandoned Canadian real estate.

This article was written by Adam Button at www.forexlive.com.

Eyes are on the US retail sales report today, and the ‘control group’ in particular that excludes the volatile components on food, energy and building materials.

The consensus is for a +0.3% reading to match the prior month.

Going into the data, the market is pricing in a 67% probability of a 50 basis point cut. Generally, the FOMC decides on the size of the cut/hike on the first day of the meeting, which is today. The meeting will start at 10 am, though I strongly suspect that Powell has already made up his mind and will need to convince the rest of the Committee.

The US data isn’t the only North American release today. Canadian CPI is due out at the same time as the BOC flags the possibility of a larger cut. The consensus on inflation is +2.1% with core numbers running only slightly higher. Just before that data (at 8:15 am ET) we also get some data on August Canadian housing starts.

For more, see the economic calendar.

This article was written by Adam Button at www.forexlive.com.

• Will the US retail sales later mess up the Fed odds even more?
• Dollar holds lightly changed on the day
• Gold rally stalls as traders wait on Fed decision
• Germany September ZEW survey current conditions -84.5 vs -80.0 expected
• European indices hold higher to start the day
• What are the main events for today?
• Eurostoxx futures +0.5% in early European trading
• FX option expiries for 17 September 10am New York cut
• A light one on the agenda in Europe today
• The bond market stays in focus in run up to the Fed tomorrow
• New Zealand Treasury see more positive data, but no firm sign of a recovery just yet

Markets:

• AUD leads, CAD lags on the day
• European equities higher;
  S&P 500 futures up 0.24%
• US 10-year yields flat at
  3.618%
• Gold
  down 0.29% to $2,575
• WTI
  crude up 0.20% to $70.23
• Bitcoin
  up 1.49% to $59,069

It’s been a
quiet session with no major news releases. The only economic report was the
German ZEW which missed expectations by a big margin.

In the
markets, the mood is tentatively positive as risk assets continue to gain as we
head into the FOMC decision tomorrow. The probability for a 50 bps cut stands
now around 65%.

In the
American session, we get the US Retail Sales and the US Industrial Production
data. If we get weak readings, then the market will likely seal the 50 bps cut
with a 70%+ probability. In case the data comes out strong though, it’s
unlikely that we will see much change in the pricing although we should get closer to a 50/50 chance.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Last month, July retail sales nudged up by 1.0% and beat estimates here. Ten out of the thirteen categories showed an increase, so that helped. But this time around, the estimate is for headline retail sales to show a 0.2% decline. That said, ex-autos is estimated to increase by 0.2% and the more important control group is expected to be higher by 0.3% again.

The hurdle doesn’t seem too high but spending might cool a little after the hotter-than-expected July performance. That especially as we are starting to build towards the holiday spending spree in the months ahead.

In any case, it’s not so much about the details of the data at this point. This is a market that is currently trending high on emotions ever since the whole carry trade fiasco at the end of July and start of August.

And in pricing in higher odds of a 50 bps move by the Fed since last week, it looks like traders are very much caught in that again.

As such, I would argue that the risks are asymmetric when it comes to the US retail sales today.

If the report is a poor one, it would just serve to exacerbate calls for a 50 bps rate cut tomorrow. That considering market players are wanting to try and force that on the Fed, or so it would seem.

But if the report is relatively in line with estimates and even perhaps showing that spending is doing fine, markets are likely to take that as a “carry on as you will” message. There might be some minor adjustments to the current pricing in favour of 25 bps but surely we won’t go as far as to pricing out the possibility of a 50 bps move.

Timiraos’ report last week certainly threw a curveball to markets. The Fed communique since Jackson Hole has been siding with a 25 bps move. But then now, traders have had to rethink whether 50 bps should still be in the picture.

And when you give traders an inch, they’ll happily take a mile. Even more so if they can lean on the data to back that up.

Either way, a poor report today will certainly make things very, very interesting going into tomorrow. That especially given the current market pricing. It will make this one of the most anticipated and watched Fed meetings in recent times.

This article was written by Justin Low at www.forexlive.com.

The changes among the day remain light, with dollar pairs all holding within 10 pips change currently. It’s just one of those days where even if there are any moves, one shouldn’t look too much into it. At this point, it’s all about the Fed tomorrow.

USD/JPY was a bit more volatile in Asia, trading up to 141.25 but is now flat at 140.60. Meanwhile, EUR/USD saw a light extension of its range earlier to 1.1146 but is now flat again around 1.1135. So, there’s not really a whole lot to talk about in terms of the movement today.

In the equities space though, US futures are pushing higher with tech shares seen rebounding. S&P 500 futures are up 0.4% with Nasdaq futures up 0.6% currently. In the bond market, 2-year yields remain on edge at 3.556% and 10-year yields down marginally on the day at 3.614%.

As for Fed pricing, traders are still seeing ~67% odds of a 50 bps rate cut currently.

This article was written by Justin Low at www.forexlive.com.