A Busier Economic Calendar Puts the Pound in the Spotlight

Earlier in the Day:

It is a quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in focus in the early hours. Later this morning, the Bank of Japan will be in action, with finalized industrial production figures from Japan also due out.

For the Kiwi Dollar

In the 4^th quarter, the NZIER Business Confidence Index slumped by 28%. The Index had tumbled by 11% in the 3^rd quarter.

According to the NZIER Survey,

• COVID-19 lockdown measures and international border restrictions weighed on business confidence and demand.
• A net 34% of firms expect deterioration in general economic conditions in the months ahead, up from 11%.
• There was also a net 1% of firms reporting weaker demand in their own businesses.
• The manufacturing sector was most affected, with a net 34% of manufacturers expecting a worsening in the economy. Things were not much better for the services sector, however.
• On the labor front, labor shortages and a sharp pickup in inflationary pressures were also negatives.
• A net 61% reported increased costs, the highest since June 2008.
• Significantly, a net 65% of businesses plan to increase prices in the next quarter.

The Kiwi Dollar moved from $0.67942 to $0.67933 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.09% to $0.6795.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.11% to $0.7209, while the Japanese Yen was up by 0.02% to ¥114.610 against the U.S Dollar.

The Day Ahead

For the EUR

It’s a busier day ahead on the economic calendar. German and Eurozone ZEW Economic Sentiment figures for January will be in focus. Since the start of the pandemic, EUR sensitivity to the ZEW numbers has seen a marked increase. Expect any weak numbers to test support for the EUR.

At the time of writing, the EUR was down by 0.02% to $1.1406.

For the Pound

It’s particularly busy day ahead on the economic calendar. December claimant count figures and November’s unemployment rate will be the key stats of the day. With the markets expecting a more hawkish BoE in the coming months, upbeat stats would support another near-term rate hike.

At the time of writing, the Pound was down by 0.02% to $1.3644.

Across the Pond

NY Empire State Manufacturing numbers are due out of the U.S. Baring particularly dire numbers, however, the stats should have a muted impact on the Dollar.

On Monday, the U.S Dollar Spot Index rose by 0.10% to end the day at 95.258.

For the Loonie

Housing start figures for December are due out later today. We don’t expect the numbers to have a material impact on the Loonie.

We will expect market reaction to the OPEC’s monthly report and the impact on crude oil prices, however.

At the time of writing, the Loonie was down by 0.02% to C$1.2518 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.