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A Quiet Economic Calendar Leaves Focus on Geopolitics

The ECB’s Economic Bulletin is the only major release for the 2nd half of the day. Can trade optimism continue to support riskier assets?
Bob Mason
Global financial markets

Earlier in the Day:

It was a relatively busy day on the Asian economic calendar in the earlier hours of this morning.

The Japanese Yen was in focus, with December inflation, industrial production, and retail sales figures providing direction. Industrial profit figures out of China were also in focus this morning.

On the geopolitical front, positive sentiment towards trade provided early support to the Aussie dollar and Kiwi dollar, which managed to avoid a holiday sell-off.

For the Japanese Yen

Tokyo’s core annual rate of inflation picked up to 0.8% in November, which was better than a forecast of 0.6%. In October, the core annual rate of inflation had stood at 0.6%. According to consumer price figures released by the Ministry of Internal Affairs and Communication,

  • Prices for clothes & footwear (+3.1%), furniture & household utensils (+3.0%), and culture and recreation (+2.8%) provided support.
  • There were also increases in prices for housing (+0.5%), medical care (+0.9%), and transportation & communication (+0.9%).
  • Partially offsetting rising prices, however, were price falls for education (-6.1%) and fuel, light, & water charges (-0.7%).
  • The annual rate of inflation came in at 0.9%, with food prices rising by 2.1% year-on-year. In October, the annual rate of inflation had stood at 0.8%.

The Japanese Yen moved from ¥109.577 to ¥109.563 upon release of the figures, which preceded the industrial production and retail sales numbers.

According to the Ministry of Economy, Trade, and Industry, retail sales fell by 2.1% in November, which was worse than a forecasted decline of 1.7%. In October, retail sales had slumped by 7%, year-on-year.

Industrial production fell by 0.9% in November, according to prelim figures. Economists had forecast a 1.4% fall. In October production had fallen by 4.5%.

According to the Ministry of Economy, Trade, and Industry,

Industries that mainly contributed to the decrease were:

  • Production machinery.
  • Electrical machinery, and information and communication electronics equipment.
  • Other products.

Industries that mainly contributed to an increase were

  • Motor vehicles
  • Transport equipment (excl. motor vehicles).
  • Electronic parts and devices.

The Japanese Yen moved from ¥109.552 to ¥109.515 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.15% to ¥109.47 against the greenback.

From China

Industrial profit figures were in focus, providing the Aussie Dollar with support. Profits jumped by 5.4% in November, partially reversing October’s 9.9% slump.

The Aussie Dollar moved from $0.69474 to $0.69496 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.6948.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.15% to $0.6679.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats de out of the Eurozone to provide the EUR with direction.

While there are no material stats, the ECB is scheduled to release the Economic Bulletin later this morning. Following further weakness in the manufacturing sector, any negative growth forecasts would be negative for the EUR>

At the time of writing, the EUR was up by 0.11% to $1.1110.

For the Pound

It’s also a quiet day ahead on the economic calendar, with no material stats due out of the UK to provide the Pound with direction.

With the UK Parliament in recess until 5th January, there’s unlikely to be too much chatter to influence the Pound.

Sentiment continues to be negative, however, as the markets wait on to see how Johnson progresses with the EU on trade.

At the time of writing, the Pound was down by 0.10% to $1.2980.

Across the Pond

It’s a quiet day on the data front, with no material stats scheduled for release.

On the geopolitical risk front, expect any chatter on trade to provide direction.

At the time of writing, the Dollar Spot Index was down by 0.04% to 97.494.

For the Loonie

It’s a quiet day on the economic calendar, with no material stats due out of Canada to provide direction.

A lack of stats will leave the Loonie in the hands of crude oil prices on the day. Disappointing GDP numbers at the start of the week further reflected Canada’s economic woes. Hopes are for a pickup in activity, with the phase 1 trade agreement and the USMCA expected to improve global trade terms.

That should limit any major downside for the Loonie near-term.

The Loonie was up by 0.10% to C$1.3109 against the U.S Dollar, at the time of writing, with rising crude oil prices providing support.

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