Australia Trade Data Disappoints as Focus Shifts to Draghi and the EUR

After dovish commentary from FED Chair Powell and the RBA rate cut, it’s over to Draghi and the ECB.
Bob Mason
Currency exchange notice board

Earlier in the Day:

The economic calendar was on the quieter side through the Asian session this morning.

Economic data was limited to Australia’s April trade data.

For the Aussie Dollar,

The trade surplus narrowed from a revised A$4.887bn to A$4.871bn in April, coming up short of a forecasted widening to A$5.050bn.

According to the ABS,

The exports of goods and services increased by 2% month-on-month to A$40,425m.

  • Non-rural goods exports rose by A$691m (3%). The exports of non-monetary gold (A$272m) and net exports of goods under merchanting (A$8m) also contributed.
  • Weighing on exports was the exports of rural goods, which fell by A$67m (2%).
  • Service credits rose by A$65m (1%).

The imports of goods and services increased by A$985m (3%) to A$35,554m.

  • The imports of intermediate and other merchandise goods increased by A$423m (4%). There were also increases in the imports of capital goods (A$308m) and consumption goods (A$298m).
  • Weighing on imports was the imports of non-monetary gold, which fell by A$40m (9%).
  • Service debits fell by A$5m.

The Aussie Dollar moved from $0.69700 to $0.69649 upon release of the figures. At the time of writing, the Aussie Dollar was down 0.07% to $0.6965.

Elsewhere,

At the time of writing, the Kiwi Dollar was up by 0.08% to $0.6624, while the Japanese Yen was up by 0.17% to ¥108.28 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another busy day ahead for the EUR. On the data front, German factory orders are due out early on in the day.

With Germany’s manufacturing sector now having been in contraction since the start of the year, the markets will be looking for a pickup in demand. The ongoing U.S – China trade war and weakening global demand, however, will likely have limited any upside in orders in April.

Later on in the day, the Eurozone’s 3rd estimate GDP numbers for the 3rd quarter are due out, which will likely have a muted impact on the day.

The focus will be on the ECB through the European session, with the Draghi and the ECB Press conference likely to be the main event.

Following dovish commentary from FED Chair Powell and rate cuts by the RBNZ and RBA, the EUR could be in for a tumble if Draghi delivers on TLTRO.

ECB forecasts for growth and inflation will also be in the spotlight.

At the time of writing, the EUR was up 0.09% to $1.1262.

For the Pound

It’s a quiet day on the economic calendar, with no material stats due out of the UK.

While there are no material stats due out, BoE Governor Carney is due to speak later today. As central banks close the door on monetary policy tightening, will Carney maintain is hawkish stance?

While UK economic data was skewed to the negative this week, the all-important service sector PMI reported a slight pickup in activity in May.

On the political front, Theresa May’s last day as the leader of the Conservative Party is tomorrow, which could leave the Pound exposed to chatter from Parliament.

At the time of writing, the Pound was up 0.06% to $1.2705.

Across the Pond

It’s another relatively busy day ahead on the economic calendar.

Alongside the weekly jobless claims figures, 1st quarter nonfarm productivity, unit labor costs, and April trade data are due out.

Following the disappointing ADP numbers from Wednesday, the Dollar will be more responsive to the jobless claims numbers.

Barring material deviation from prelim numbers, nonfarm productivity and unit labor cost figures will likely have a muted impact.

Outside of the stats, we can expect more chatter on trade throughout the day. Will Mexican tariffs be rolled out next week or have talks between the Mexican government and the U.S administration been fruitful…

At the time of writing, the Dollar Spot Index was down 0.02% to 97.054.

For the Loonie

It’s a busier day ahead, with April trade data and May’s Ivey PMI due out later today. Both sets of numbers will have an impact on the Loonie that has had to face tumbling crude oil prices.

Outside of the stats, market sentiment towards the global economy and the impact on crude oil prices will also be a factor.

The Loonie was up by 0.12% to C$1.3378, against the U.S Dollar, at the time of writing.

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