Finally a top tier US data print comes in above expectations. US Retails Sales overnight +0.6% beat 0.3% expected and recorded the best monthly gain in 7 months. The previous months print was also revised much higher. The consumer is the backbone of the US economy and health here cant be ignored ! The positive data pushed US 10yr yields to an overnight high of 2.28%. This moved the DXY ( USD index) up 0.5%. The yen most sensitive to US yields was the big under performer down almost a 1% while the Kiwi not far behind down 0.7%. The USD positioning is at extreme levels and looks like we are beginning a trend reversal.
Up tonight the big event risk is the FOMC minutes. It should remind the market that the Fed is still in play. Balance sheet reduction coming ” relatively soon” by all accounts means Sept ! That doesnt give the market much time to start pricing it in. Watch US 10yr yields closely. A move above 2.3% is technically very bullish and potential for a spike higher. We get this and USD will certainly get its mojo back and is the risk for the market. The key currencies to watch will be USDYEN and Kiwi. Long and short here the play!