Brexit and Economic Data Put the GBP and USD in Focus

Bond yields provide supported to risk sentiment early on. Economic data and Brexit will be in focus through the day.
Bob Mason
Pound Coins Dollar

Earlier in the Day:

Economic data released through the Asian session was on the lighter side once more. February trade data out of New Zealand provided the Kiwi Dollar with direction in the early hours.

Outside if the data, RBA Assistance Governor Ellis spoke in the early hours.

For the Aussie Dollar,

A scheduled speech by RBA Assistance Governor Ellis in the early hours had limited impact on the Aussie Dollar. There was nothing particularly new covered in the speech, with the focus being on consumption, labor market conditions and household income growth.

The Aussie Dollar moved from $0.71087 to $0.711 levels. At the time of writing, the Aussie Dollar was up 0.10% to $0.7119, support coming from a pickup in risk appetite in the early hours.

For Kiwi Dollar,

The trade balance shifted from an NZ$914m deficit to an NZ$12m surplus in February

According to figures released by NZ Stats,

  • Overall goods exports rose by NZ$371m (8.3%) to NZ$4.8bn compared with the same month of last year.
  • Lamb exports reached a record high in February, with lamb exports hitting NZ$391m. The record high was attributed to higher prices.
  • Overall meat exports reached a record high NZ$839m. The increase was attributed to the record high lamb exports.
  • The total value of goods imports increased by NZ$547m (13%) to NZ$4.8bn.
  • The increase was attributed to an NZ$133m (27%) jump in the imports of vehicles, parts, and accessories.

The Kiwi Dollar moved from $0.69109 to $0.69094 upon release of the figures. At the time of writing, the Kiwi Dollar stood at $0.6910, up 0.01% for the session.

Elsewhere,

At the time of writing, the Japanese Yen was down by 0.08% to ¥110.06 against the U.S Dollar. Risk appetite returned through the early hours to pull the Yen into the red.

In the equity markets, the Nikkei was up by 2.16%, with the Hang Seng and ASX200 up by 0.14% and 0.09% respectively. The CSI300 bucked the trend early on, down by 0.59% at the time of writing.

A pickup in government bond yields provided support early on, with the U.S futures also pointing to a positive start to the day.

Looking across at U.S Treasury yields, 10-year yields stood at 2.44%, which was in line with the yield for 3-month Treasuries.

The Day Ahead:

For the EUR,

It’s a busier day ahead on the economic calendar. Germany consumer sentiment figures will provide direction for the EUR early on.

Following on from the consumer sentiment figures, 4th quarter GDP numbers out of France could also provide the EUR with direction. Finalized numbers will need to come in ahead of forecasts, however, to provide any upside to the EUR.

Following the EUR’s reaction to business sentiment figures on Monday, expect consumer sentiment figure to also influence. Outside of the stats, risk sentiment will continue to be a driving force ahead of a scheduled Draghi speech tomorrow.

At the time of writing, the EUR was down 0.02% at $1.1310.

For the Pound,

It’s another quiet day on the economic calendar. Mortgage approvals are due out this morning, which will unlikely have a material influence on the Pound.

The market focus will remain on Brexit chatter through the day. Overnight, Parliament voted in favor of taking control of the Brexit process. The focus will now shift to Wednesday. Expect volatility in the Pound to continue ahead of the Wednesday session, however. There is a possibility of a parliamentary vote on Theresa May’s deal if she can rally the rebels but it may come at a price…

At the time of writing, the Pound was down by 0.08% to $1.3184.

Across the Pond,

It’s a busy day ahead for the Greenback. Economic data due out of the U.S this afternoon includes February housing sector data and March consumer confidence figures.

Housing sector data will provide the Dollar with direction. A continued slide in mortgage rates and strong labor market conditions have supported a pickup in sector activity. In spite of the pickup in applications, the numbers are forecasted to pressure the Dollar. The Dollar’s downside should be limited, however, with weather conditions likely to have weighed on housing starts in February.

The key driver this afternoon will be March consumer confidence figures. Anything in line with, or better than forecast, will be Dollar positive and also positive for Treasury yields.

Consumption remains key to the U.S economy. Upbeat consumer confidence figures will ease some of the market jitters over the U.S economic outlook

At the time of writing, the Dollar Spot Index was down by 0.03% to 96.540.

For the Loonie,

Yet another quiet day ahead leaves the Loonie firmly in the hands for crude oil prices. The weekly API figures due out late in the session will influence alongside market risk appetite through the day.

The Loonie was up 0.08% at C$1.3393, against the U.S Dollar, at the time of writing., with support coming from a pickup in crude oil prices.

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