4th Quarter GDP Numbers, Powell and Trade Talk Keep the Dollar in View

Earlier in the Day:

Economic data release was on the heavier side through the Asian session. Key stats included January industrial production and retail sales figures out of Japan and January business confidence figures out of New Zealand. Later in the morning, 4^th quarter private CAPEX and January private sector credit figures were released. The stats were rounded off with the all-important private sector PMI numbers out of China.

For the Japanese Yen,

Industrial production tumbled by 3.7% in January, according to prelim figures. The slide was worse than a forecasted 2.4% decline. In December, industrial production fell by 0.1%.

According to figures released by the Ministry of Economy, Trade and Industry,

• Industries that mainly contributed to the decrease were:
  • Motor vehicles; electrical machinery and information and communication electronics equipment; and production machinery.
• Industries that mainly contributed to an increase were:
  • Transport equipment (excl. motor vehicles); inorganic and organic chemicals; and petroleum and coal products.

Retail sales increased by 0.6%, year-on-year, in January, falling short of a forecasted 1.4% rise. Sales in December rose by 1.3%. According to figures released by the Ministry of Economy, Trade and Industry, sales fell by 2.3% month-on-month.

The Japanese Yen moved from ¥110.887 to ¥110.883, against the Dollar, upon release of the figures. At the time of writing, the Japanese Yen stood at ¥110.84, up by 0.14% for the session.

For the Kiwi Dollar,

The ANZ Business Confidence Index fell from -24.1 to -30.9 in January. According to figures released by ANZ,

• A net 31% of respondents expected general business conditions to worsen in the year ahead.
• Firms’ expectations of their own activity eased by 3 points to a net 11% expecting an improvement in conditions.
• Employment intentions fell 4 points to +3%. A net 2% of firms are expecting to increase investments, down by 2 points.
• Profit expectations fell by 5 points to a net 11% expecting a decline in profits. All sectors were in the red.

The Kiwi Dollar moved from $0.68511 to $0.68399 upon release of the data. At the time of writing, the Kiwi Dollar was down by 0.10% to $0.6841.

For the Aussie Dollar,

Private new capital expenditures rose by 2% in the 4^th quarter, quarter-on-quarter. In the 3^rd quarter, new CAPEX had fallen by 0.5%. Forecasts were for a 1.1% increase. According to figures released by the ABS,

• New capital expenditure on buildings and structures rose by 3.2%. Expenditures on equipment, plant and machinery rose by just 0.7%
• Year-on-year, total new CAPEX rose by 1.9%. New CAPEX on buildings and structures fell by 2.9%. By contrast, new CAPEX on equipment, plant and machinery surged by 8.1%.

Private sector new credit increased by 0.2% in January, month-on-month, falling short of a forecasted 0.3% rise. In December, private sector new credit also rose by 0.2%. According to figures released by the RBA,

• Housing credit rose by 0.2%, easing up from a 0.3% increase in December.
• Personal credit fell by 0.6%, falling further from a 0.4% decline in December.
• Business credit increased by 0.3%, rising at the same pace as in the previous month.
• Year-on-year, total credit rose by 4.3%, easing from a 4.9% rise in January of last year.
• Personal credit slid by 2.8%, year-ending January 2019. In the year ending January 2018, personal credit fell by 1.1%.
• Business credit rose by 5.2%, accelerating from a 3.3% increase the previous year.
• Housing credit increased by 4.4% in the year ending January 2019. Housing credit had risen by 6.3% in the year ending January 2018.

The Aussie Dollar moved from $0.71936 to $0.71875 upon release of the figures, which preceded China’s private sector PMIs.

Out of China

The NBS Manufacturing PMI fell from 49.5 to 49.2 in February. Forecasts were for the PMI to hold steady at 49.5.

The non-manufacturing PMI fell from 54.7 to 54.3 in February, falling beyond a forecasted 54.5.

Hopes of the non-manufacturing sector picking up the slack were dashed, with the pace of growth easing in February. The manufacturing sector contracted for a 3^rd consecutive month after having stalled in October and November.

According to the figures released by the NBS, the PMI fell to its lowest level in 2-years.

The Aussie Dollar moved from $0.71540 to $0.71454 upon release of the figures. At the time of writing, the Aussie Dollar was up 0.06% to $0.7142.

The Day Ahead:

For the EUR

French consumer spending and 2^nd estimate, 4^th quarter GDP numbers will provide direction for the EUR in the early part of the session.

Through the European session, prelim February inflation numbers out of France, Germany, Italy, and Spain are also scheduled for release.

Barring deviation from 1^st estimate numbers, we would expect the inflation numbers to provide direction for the EUR through the day.

Outside of the numbers, risk sentiment will continue to play a hand in the EUR’s direction. Any more dovish chatter from FOMC members and the FED Chair could prop up the EUR in spite of the weak economic outlook.

At the time of writing, the EUR up by 0.07% at $1.1378.

For the Pound

It’s another quiet day on the economic data front.

The lack of stats remains a positive for the Pound. Prospects of a no deal Brexit continue to diminish as members of Parliament look to prevent the unthinkable. Uncertainty remains, but for now, the can has been kicked down the road. Key dates are 12^th March and 14^th March, with few expecting Britain to be out of the EU on 29^th.

Brexit chatter will remain the key driver through the day.

At the time of writing, the Pound was down by 0.06% at $1.3301.

Across the Pond

It’s a big day for the Greenback. 4^th quarter GDP figures will provide direction for the Dollar through the early part of the day. Other stats scheduled for release in the early part of the session include the weekly jobless claims, and Chicago’s February PMI. Influence of the secondary data will depend on the 4^th quarter GDP numbers.

Outside of the data FED Chair Powell and FOMC member’s Clarida, Bostic and Harker are scheduled to speak.

FED Chair Powell and FOMC member Clarida are first up, with FED chair Powell the key driver. The speech is scheduled ahead of the 4^th quarter GDP numbers and could ultimately overshadow the stats, barring betting than expected figures.

At the time of writing, the Dollar Spot Index was up down by 0.06% to 96.095.

For the Loonie

January’s RMPI will provide the Loonie with direction in the early afternoon. While forecasted to be Loonie positive, crude oil prices and market risk sentiment will likely remain the key drivers through the day.

The Loonie was up by 0.02% to C$1.3154, against the U.S Dollar, at the time of writing.