Key US Data Up Next

Today sees a double whammy for US data with both December PPI and Retail Sales due. On the back of weaker-than-forecast US inflation, today’s data is drawing more attention-than-usual. USD has been in decline since those Dec CPI figures were released with traders now anticipating a further pivot from the Fed when it meets in a fortnight’s time. The clear winner from this recent shift in Fed expectations has been the equities sector with stock indices broadly higher as traders look towards a smaller Fed hike in Feb. With this in mind, today’s data will be closely watched by traders and has the potential to drive meaningful action in both USD and equities alike.

Low Expectations for Today’s Data

Typically, better-than-forecast PPI and Retail Sales would help lift USD given PPI’s importance for gauging inflationary trends and Retail Sales’ importance for calculating GDP. With both readings expected to have weakened further on the prior month, the bar is set quite low today for an upside surprise. However, whether such results would fuel a USD rally is a little less certain.

Trading Scenarios

The main story currently is the drop in inflation and so it would likely take a large upside shock today to derail expectations for a smaller Fed hike next month. Similarly, if PPI is confirmed to have weakened further, especially if below forecasts, this would likely see USD lower on the back of the release with stocks rallying.

Technical Views

NASDAQ

The rally in the Nasdaq so far this year has seen price moving sharply higher off the 10700.41 lows. Price has now broken back into the bull channel off last year’s lows and is currently testing the 11540.72 level. This is a key level, with the long-term bear trend line sitting just above. If bulls can break above here, focus will be on a move up towards 12220.22 next.