Brexit and Italy Put the Pound and the EUR in the Mix

Earlier in the Day:

Economic data released through the Asian session was on the lighter side this morning, with key stats limited to October electronic card sales figures out of New Zealand.

For the Kiwi Dollar, electronic card sales rose by just 0.1% in October, falling well short of a forecasted 0.6% rise and September’s 1.1% jump, while year-on-year, sales increased by 6.2%, picking up from September’s 5.7% rise.

According to figures released by NZ Stats, most industries showed softer card sales in October, with the exception of the fuel industry, where petrol prices at the pump hit a record high in October, before easing back late in the month.

• Month-on-month, spending rose in 4 of the 6 retail industries, the largest in the fuel industry, up by 1.4% (NZ$9.1m).
• The largest slide in spending was seen in the apparel industry, with spending down 1.2% (NZ$3.7m).
• Core retail spending, which excludes the vehicle-related industries, was flat month-on-month.

Following last week’s RBNZ policy decision and upbeat tone, the latest numbers and influence from rising fuel prices will be of little support for those looking for a more hawkish stance on policy.

At the time of writing, the Kiwi Dollar was up 0.1% to $0.6744, investors brushing off the numbers early.

Elsewhere, the Japanese Yen was down 0.14% to ¥113.99, while the Aussie Dollar was up 0.06% to $0.723, recovering some of late last week’s reversal that came in response to a hawkish FED.

The Day Ahead:

For the EUR, there are no material stats scheduled for release through the morning, leaving the markets to focus on Italy and the coalition government’s budget plans ahead of tomorrow’s EU Commission deadline.

While the budget is the primary area of focus, infighting within the coalition government could see a collapse of the government and a new election. What a coup that would be for the Establishment and the pro-EU camp.

At the time of writing, the EUR was down 0.11% to $1.1324, with noise from Italy the key driver for the EUR through the day.

For the Pound, a quiet day on the data front leaves Brexit chatter the main area of focus through the day, with Brexit news from over the weekend giving the markets little confidence early on in the Asian session. Negative comments from both the EU on outstanding issues and from within the Tory party have brought the Pound back to its knees.

At the time of writing, the Pound was down 0.32% to $1.2931, with Brexit news the key driver through the day.

Across the Pond, a quiet day on the data front will leave Capitol Hill in focus, as the market looks towards the Democrats and their plans for the remainder of the year and the next 2-years and what possible impact there will be on the U.S economy and ultimately monetary policy.

From the Oval Office, the U.S – China trade war will be in focus, with Trump ever more incentivised to deliver a U.S – China trade agreement.

At the time of writing, the Dollar Spot Index was up 0.10% to 97.03, with Capitol Hill and geo-political risk in Europe in focus through the day.

For the Loonie, there are also no material stats scheduled for release, leaving crude oil prices and market risk sentiment to provide direction through the day, a bounce in crude oil prices early in the day providing the Loonie with much needed support.

The Loonie was up 020% to C$1.3186 against the U.S Dollar at the time of writing, with crude oil prices the key driver through the day.