[LFX]

The FX market is buying USD not selling them – as the news is uniformly bullish for growth in the US from retail sales to the Empire FED. PPI was higher but all energy as expected. The risk on trade may be shifting to a new theme – good news for the US means higher rate risk which means a higher USD? That may be the return of rates as the key for trading FX. The 10Y is 3.46% off ½ point and hardly at any exciting technical point. So many are scratching their heads and wondering if positions also dominate today as the short USD plays are vulnerable to a squeeze. The Risk-On trade may be intact with EUR/JPY higher and US equities bid. All this makes how the NY trading session works out an interesting one for the medium term – as it has the makings of being a reversal or a paradigm shifter today.

NEWS

US August Retail Sales up 2.7% from -0.2% - more than expected. The consensus was 2.0%. The Ex-autos was up 1.1% also stronger as consensus was 0.4%, July was -0.5%. The ex-gasoline sales were up 2.4% after -0.1% in July. The core sales – ex autos, gas, building materials was up 0.8% after -0.3%. The rise in auto sales was 10.6% - best since October 2001 which was 25.6%.

NY Empire FED manufacturing index for September up 18.88 from 12.08 – better than expected. Consensus was 14. The employment fell to -8.33 from -7.45; prices paid rose to 20.24 from 13.83; New orders rose to 19.84 from 13.43; Inventories -25 from -22.34; unfilled orders -4.76 form -9.57.

US August PPI rose 1.7%, ex food/energy up 0.2% - worse than expected. The consensus was up 0.8%. This follows -0.9% in July and puts the y/y at 1.8%. Intermediate goods 1.8% , ex energy up 0.6; crude goods up 3.8%, core up 6.0%.