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Earnings and the yen: Here's what could drive stocks on Thursday

After the worst day for markets since September, here are the three things that Boris Schlossberg, BK Asset Management's managing director of foreign exchange strategy, is looking out for on Thursday.

1. Retail earnings

Ralph Lauren and The Children's Place are both set to report quarterly earnings before the opening bell Thursday, and Gap is scheduled to report after the closing bell. Schlossberg is watching these earnings out of the beaten-down retail space to gauge whether retail can "come out of their nosedive."

If the retailers report strong earnings, "That's not good news just for the sector itself but perhaps a signal that the U.S. consumer is starting to really spend that could be good news for the second half of the year," Schlossberg said on CNBC's "Trading Nation."

Analysts are forecasting earnings of 29 cents per share for Gap, $1.64 per share for The Children's Place and 78 cents per share for Ralph Lauren, according to FactSet data.

2. Federal Reserve Bank of Philadelphia survey

The Federal Reserve Bank of Philadelphia is set to release on Thursday its monthly business outlook survey, which takes into account manufacturing data in the Philadelphia area. Schlossberg is keeping an eye on this report, as it tends to be a reliable gauge of broad manufacturing trends.

Although the survey itself is relatively minor, Schlossberg said, "It's critical, because if the number is significantly worse than the market expects, that could be a canary in the coal mine showing the manufacturing growth that we've seen so far is starting to slow."

3. Key level in dollar/yen

As Schlossberg deems the currency market "the single most sensitive market to political news amongst all the capital markets," he is closely watching the relationship between the Japanese yen and the U.S. dollar, which he calls the most politically sensitive of all the currency pairs.

The greenback lost ground against the yen in Wednesday trading, dipping to its lowest level since late April, on the back of a deluge of chaotic political news out of Washington. Going forward, Schlossberg is watching the 110 level, which the dollar approached on Wednesday, but which has not been hit since April.

"If that level is breached, that could be a signal of much bigger and greater risk aversion flows that could spill over into the equity market," he said.

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