As Trade Talks Resume, Key Stats Puts the Dollar in Focus

Earlier in the Day:

It was a particularly busy Asian session on the economic calendar this morning.

The Kiwi Dollar, Aussie Dollar, and Japanese Yen were all in action.

Outside of the economic calendar, the markets also continued to consider geopolitical risk on the day. The U.S – China trade talks, Brexit and tensions in the Middle East were in focus.

For the Kiwi Dollar

New Zealand’s June building consents failed to provide direction in the early hours. According to NZ Stats, building consents fell by 3.9% in June, year-on-year, partially reversing a 13.2% rise in May.

The Kiwi Dollar held steady at $0.66324 upon release of the figures. At the time of writing, the Kiwi Dollar was flat at $0.6632.

For the Japanese Yen

Industrial production fell by 3.6% in June, which was worse than a forecast 2% fall. In May, production had risen by 2%.

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

• Industries that mainly contributed to a decrease were:
  • Motor vehicles
  • Production machinery
  • Electrical machinery, and information and communication electronics equipment
• Industries that mainly contributed to an increase were:
  • Inorganic and organic chemicals
  • Petroleum and coal products.

The Japanese Yen moved from ¥108.884 to ¥108.82 upon release of the figures, which preceded the BoJ’s monetary policy decision.

Later in the morning, the Bank of Japan released its monetary policy statement and outlook report. While keeping rates unchanged at -0.1%, the BoJ failed to timeline further easing. The July monetary policy statement talked of a willingness of further easing should conditions deteriorate further. However, the minutes also stated that current policy would otherwise be maintained until the spring of 2020.

On the outlook front, the BoJ’s revised downwards both inflation and economic growth forecasts.

The Japanese Yen moved from ¥108.719 to ¥108.732 upon release of the statement and outlook report. At the time of writing, the Japanese Yen was up by 0.16% to ¥108.61 against the U.S Dollar, supported by a less dovish than expected BoJ.

For the Aussie Dollar

According to figures released by the ABS, building approvals fell by 1.2% in June, which was worse than a forecast 0.2% increase. In May, approvals had risen by 0.7%.

The Aussie Dollar moved from $0.69006 to $0.69000 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6902.

Elsewhere

In the Asian equity markets, all the majors made ground through the session. With the U.S – China trade talks resuming, the CSI300 led the way, rising by 0.74% at the time of writing. The Nikkei (+0.31%), ASX200 (+0.34), and the Hang Seng (+0.34%) weren’t far behind.

With trade talks resuming, expectations of a FED rate cut tomorrow also provided some upside early on.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead. Key stats due out of the Eurozone include Germany’s GfK Consumer climate figures and prelim July inflation numbers. Out of France, June consumer spending and GDP figures for the 2^nd quarter are also due out.

We can expect Germany’s GFK Consumer Climate and French GDP and consumer spending figures to be the key drivers on the day.

In last week’s press conference, Draghi spoke of expected support from consumer spending. Any softening in consumer confidence and/or consumer spending and expect the EUR to react.

On the geopolitical front, any updates from the resumption of trade talks between the U.S and China and updates from Iran will also influence.

At the time of writing, the EUR was down by 0.04% to $1.1141.

For the Pound

There are no material stats due out of the UK to provide direction for the Pound.

A lack of stats will continue to leave Brexit in focus. Boris Johnson’s stance on Brexit has caused some alarm. Expect more chatter on the day.

At the time of writing, the Pound was down by 0.52% to $1.2145.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats due out of the U.S include the FED’s preferred Core PCE Price Index numbers and July’s CB Consumer Confidence figures.

While pending home sales and personal spending figures for June will also influence, we can expect inflation and consumer confidence to be the key drivers.

House price figures due out on the day will likely have a muted impact on the Dollar.

Outside of the stats, updates from the U.S – China trade talks and any chatter on Iran will also influence.

At the time of writing, the Dollar Spot Index was up by 0.08% to 98.119.

For the Loonie

There are no material stats due out of Canada to provide the Loonie with direction.

We can expect the Loonie to takes its cues the U.S – China trade talks.

The Loonie was down by 0.07% at C$1.3173, against the U.S Dollar, at the time of writing.