US futures jump after impressive retail earnings results
US futures are rising today as investors react to strong corporate earnings from retailers. In a report released earlier today. Target said that its revenue rose to $23 billion in the second quarter. That was $4.5 billion higher than what is recorded in the same quarter in 2019. Its net profit increased from $938 million to more than $1.68 billion. This revenue growth was mostly because of a near 300% growth in digital sales. These numbers, together with the strong results by Home Depot and Walmart yesterday, have helped boost sentiment in the US. However, retailers are bracing for several risks. First, Congress is yet to pass the stimulus, which would provide about $1,200 to people. Second, because of the pandemic, most students are learning online, which will affect the back-to-school season.
The British pound pared back some earlier gains even after the UK reported strong inflation data. According to the Office of National Statistics (ONS), the country’s headline consumer price index rose to 1% in July from the previous 0.6%. That was higher than the 0.6% that analysts were expecting. The core CPI, which excludes the volatile food and energy products rose by 1.8% on a year-on-year basis. It rose by 0.4% on a MoM basis. Meanwhile, the Retail Price Index (RPI) rose by 1.6% while the core RPI rose by 1.9%. A major concern for the UK is the ongoing Brexit negotiations.
The euro was little changed today as investors reacted to the Eurozone’s inflation data. According to Eurostat, the headline CPI rose by 0.4% in July from the previous 0.3%. On a month-on-month basis, the CPI declined by 0.4% after rising by 0.3% in the previous month. The core CPI rose by 1.2% on an annualised basis and declined by 0.3% on a MoM basis. Separately, the Canadian dollar rose against the USD after Justin Trudeau appointed Chrystia Freeland as the next finance minister. The currency also reacted to strong inflation data from Canada. According to Statistics Canada, the headline CPI rose by 0.1% in July while the common CPI rose to 1.3%.
The EUR/USD pair is little changed today and is trading at 1.1935, which is a few pips above the previous double top of 1.1913. On the daily chart, the price is above the short and medium-term moving averages. The RSI has also moved above the overbought level of 70. It is also along the upper side of the Bollinger Bands. Therefore, the pair is likely to continue rallying as bulls now aim for the next resistance at 1.2000.
The USD/CAD pair dropped to an intraday low of 1.3147, which was the lowest it has been since January this year. The price is along the lower line of the Bollinger bands and below the two lines of the envelopes indicator. Also, the signal and main line of the MACD are at the lowest lines since May this year. Therefore, the price is likely to continue falling as bears target the next resistance at 1.3100.
The S&P 500 index crossed the important level of $3,387 yesterday. This level was its previous record high, which it reached in March. On the daily chart, the price is above the short and longer-term moving averages while volatility, as measured by the Average True Range (ATR) has been falling. The price is also along the upper line of the Bollinger Bands, which means that the price is likely to continue rising as bulls aim for the next resistance at $3,340.