A Shift in Sentiment towards Trade to Test Risk Appetite

Sentiment towards trade took a turn for the worse on Wednesday, with even a record Aussie trade surplus doing little to support the AUD early on…
Bob Mason
US Stock Market, China, Netflix

Earlier in the Day:

It was a relatively quiet day on the economic calendar through the Asian session this morning.

Key stats included September trade data out of Australia.

On the geopolitical risk front, chatter on trade also provided direction early in the day. Concerns over China’s demand for September trade tariffs to be removed tested risk appetite through Wednesday and into the early hours.

For the Aussie Dollar

The trade surplus widened from A$6.617bn to A$7.180bn in September. Economists had forecasted a narrowing to A$5.000bn.

According to the ABS,

  • Goods and services credits rose by A$1,452m (3%) to A$43,215m.
    • Non-rural goods rose by A$586m (2%), non-monetary gold by A$558m (26%), and rural goods by A$240m (6%).
    • While net exports under merchandising held steady at A$15m, service credits rose by A$69m (1%).
  • Goods and services debits rose by A$889m (3%) to A$36,034m.
    • Capital goods imports rose by A$702m (12%), with intermediate and other merchandise goods up A$474m (4%).
    • The imports of consumption goods rose by A$64m (1%), with service debits up A$22m.
    • Non-monetary gold debits fell by A$373m (34%), however.

The Aussie Dollar moved from $0.68787 to $0.68833 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.10% to $0.6877.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.06% to ¥108.91 against the U.S Dollar, while the Kiwi Dollar was down by 0.11% to $0.6362.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. September industrial production figures due out of Germany will provide direction later this morning.

From the ECB, the November Economic Bulletin will provide direction later in the day.

A lighter economic calendar will leave the EUR in the hands of geopolitical risk on the day. Chatter on trade and UK politics will provide direction throughout the day.

At the time of writing, the EUR was up by 0.04% to $1.1070.

For the Pound

It’s a big day ahead on the data front. While there are no material stats due out of the UK to provide direction for the Pound, the BoE is in action this afternoon.

The markets are expecting the BoE to leave rates unchanged. We can expect some influence from the BoE Monetary Policy report, however.

Expect the Pound to react to any dissent on the day, with economists forecasting a unanimous vote in favor of a rate hold.

On the geopolitical risk front, expect campaign chatter to play second fiddle to the BoE, while any fresh opinion polls will influence.

At the time of writing, the Pound was flat at $1.2855.

Across the Pond

It’s a quiet day ahead on the economic calendar. Economic data is limited to the weekly jobless claims figures.

Barring dire numbers, however, the weekly jobless claims figures will likely have a muted impact.

Outside of the numbers, geopolitics will continue to be an influence on the day. The markets will be looking for a date and location for the signing of the Phase 1 agreement and for China to get its way on tariffs.

The Dollar Spot Index was flat at 97.955 at the time of writing.

For the Loonie

It’s also a quiet day on the economic calendar. There are no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of risk appetite and direction in crude oil prices throughout the day. Expect any negative chatter on trade to pin back the Loonie.

The Loonie was down by 0.02% to C$1.3184, against the U.S Dollar, at the time of writing.

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