GILTS: Long Setting In Futures On Wednesday

Retail sales rose 7.6% Y/Y in the week ending September 19, a deceleration from 8.5% the prior week, per the Johnson Redbook index. The 8.4% month-to-date gain through the prior week has slowed to 8.2% in the most recent week, and would mark a pullback from 8.7% in August.

• We highlight that while some seasonality issues may be at play (Labor Day fell a week later this year than it did in 2025), the Redbook anecdotals were notably softer than usual: "Sales declined last week as back-to-school categories ended and shifted to autumn items. Retailers reported light customer traffic and disappointing weekend sales. Apparel sales, which have always been the main driver for department stores and are currently the focus of the season, seemed to slow down.  Clothing and soft goods retailers therefore expressed a lack of any clear theme to stimulate business, with unseasonably warm weather cited as a possible reason. Discount stores' performance was primarily driven by sales of food and household supplies."
• It's too early for consensus to be reached on September Census Bureau retail sales (released Oct 15) though Control Group sales in August (5.6% Y/Y after 4.5%) echoed the Y/Y pickup in Redbook (8.7% after 8.2%). It remains to be seen whether the impressive momentum for consumption in Q3 so far will be kept up.

• RES 4: 7955.94 1.618 proj of the Jun 11 - 15 - Jul 29 price swing
• RES 3: 7914.38 1.500 proj of the Jun 11 - 15 - Jul 29 price swing
• RES 2: 7904.00 High Aug 13 and key M/T resistance
• RES 1: 7847.25 High Sep 21 
• PRICE: 7836.50 @ 14:30 BST Sep 22
• SUP 1: 7699.47/7575.00 50-day EMA / Low Sep 16 and bear trigger 
• SUP 2: 7508.25 76.4% retracement of the Jul 29 - Aug 13 bull leg
• SUP 3: 7386.00 Low Jul 29  
• SUP 4: 7360.00 Low Jun 11  

A strong rally in S&P E-Minis yesterday marks a bullish start to this week’s session and strengthens the likelihood of a recent reversal and the end of a corrective cycle. Note too, that a bullish engulfing candle on Sep 17, highlights a reversal signal. A continuation higher would open 7904.00, the Aug 13 high and key medium-term bull trigger. Key support is at 7575.00, the Sep 16 low. First support lies at 7699.47, the 50-day EMA. 

• RES 4: 1.4175 High Jul 13 
• RES 3: 1.4126 76.4% retracement of the Jun 24 - Aug 21 bear leg
• RES 2: 1.4080 High Aug 4 and 5
• RES 1: 1.4052 Intraday high
• PRICE: 1.4052 @ 14:36 BST Sep 22
• SUP 1: 1.3912/3732 20-day EMA / Low Aug 21 and the bear trigger
• SUP 2: 1.3715 76.4% retracement of the May 1 - Jun 24 bull cycle
• SUP 3: 1.3672 Low May 12
• SUP 4: 1.3620 Low May 7

USDCAD maintains a firmer tone and continues to appreciate. This reinforces the current short-term bull theme. The pair has traded through resistance at the 50-day EMA, currently at 1.3928. The break signals scope for a stronger retracement of the Jun 24 - Aug 21 bear leg. Sights are on 1.4080, the Aug 4 and 5 high. Key support has been defined at 1.3732, the Aug 21 low. First support to watch lies at 1.3912, the 20-day EMA.