US retail sales figures lower than expected

　　

U.S. equities traded lower throughout Wednesday’s trading. The Dow Jones Industrial Average lost 1.81% to close at 33296.96. The S&P 500 dropped 1.56% to close at 3928.86. The tech-heavy Nasdaq Composite slipped 1.24% to close at 10957.01.

Equities markets were spooked by the weaker-than-expected U.S. retail sales figures, which came in at -1.1%. Weaker consumer spending sparked a drop in the U.S. Greenback and a retreat in the consumer discretionary sector.

Despite a strong start to the year, a tense earnings season and huge layoffs reported by Fortune 500 companies, the strong upward momentum for equities may vanish in a hurry. Recessionary fears have been largely overlooked by market participants for the first two weeks of 2023; however, with weak consumer spending and the Fed FOMC meeting, which is scheduled for February 1^st, around the corner, selling pressure has once again resurfaced.

The benchmark U.S. 10-year treasury yield dropped 5.09% and was last seen trading at 3.379%. The short-term 2-year treasury yield rose 10 basis points and sits at 4.086%, as of writing.

Netflix Inc., Procter & Gamble Co., and Preferred Bank will headline today’s earnings release. After delivering on earnings expectations, Morgan Stanley retreated over Wednesday’s trading as the 10-year yield faltered around the 3.3% mark.

The Bank of Japan will be releasing its trade data during today’s Asia trading session. The Bank of Japan surprised markets by keeping its loose monetary policy and keeping a tight grip on yield curves, thus sparking a downward spike in Japanese Yen. Still, the Japanese currency was able to gain back intra-day losses throughout Wednesday.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, saw large movements in both directions throughout Wednesday’s trading and ended 0.03% higher. The Dollar surged during the Asia trading session after the Bank of Japan surprised markets by keeping its tight control over yields; however, the Greenback dropped sharply after the weaker-than-expected retail sales and PPI figures were released.

EURUSD gained 0.06% throughout yesterday’s trading. The Euro Dollar pair climbed as high as 1.088 on Wednesday, but could not sustain that level as market participants demanded the Dollar as equities faltered.

GBPUSD gained 0.47% throughout Wednesday’s trading. The British Pound took full advantage of the Dollar’s weakness and was able to keep those gains towards market close.

XAUUSD dropped 0.22% throughout yesterday’s trading. The Dollar denominated Gold extends its losing streak into the third day as the Dollar gains traction around the 102 mark.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
EUR	ECB President Lagarde Speaks	18:30
EUR	ECB Publishes Account of Monetary Policy Meeting	20:30
USD	Building Permits (Dec)	21:30	1.370M
USD	Initial Jobless Claims	21:30	214K
USD	Philadelphia Fed Manufacturing Index (Jan)	21:30	-11.0