-782024624.png)
-782024624.png)
Stronger economy means softer stocks for now
The US economy continues to surprise economists by beating retail sales forecasts for the sixth consecutive month. Reportedly, for December, the increase was 0.6%, compared to 0.3% in November and 0.4% expected. Sales excluding autos rose 0.4%, up from 0.2% a month earlier.
The currency market reacted with outright dollar buying as a hot economy reduces the chances of monetary policy easing soon. The odds of a rate cut in March fell below 60 per cent immediately after publication, although they exceeded 80 per cent late last week, according to the FedWatch Tool.
The stock market, however, is in that part of the cycle where good news is bad news for stocks because of expectations of tighter monetary policy in the future. Such a phase typically doesn't last long, but it has a high chance of remaining prevalent in the markets in the coming weeks, contributing to a correction in the year-end rally in stocks.
By the FxPro Analyst Team
Weak PMIs Failed to Dampen GBPUSD
Eurozone PMI Temporarily Helps the Euro but Is Unlikely to Change the Trend
EBC Markets Briefing | Loonie closer to key support on easing policy
Stocks under pressure amid US election jitters, dollar extends gains
Technical Analysis – GBPJPY at 3-Month High
Has Bitcoin Completed a Correction?
EUR/USD Dips to Three-Month Low Amid Strong Dollar Demand
