Some weak numbers out of China this morning weighed on the Aussie Dollar and Kiwi Dollar early, with a busy economic calendar putting focus on the EUR & USD
Economic data released through the Asian session this morning was on the heavier side, with key stats released including November’s Business PMI out of New Zealand, 4th quarter Tankan numbers out of Japan ahead of finalized October industrial production numbers due out later in the morning. Out of China, November’s fixed asset investment, industrial production and retail sales figures were also released.
For the Kiwi Dollar, the NZ Business PMI eased by 0.2 points to 53.5 in November, while holding above the long-term average of 53.4.
While the numbers were negative relative to October’s figures, they were still well ahead of levels hit through the 3rd quarter, production having contracted in both July and September, with employment having contracted in August.
The Kiwi Dollar moved from $0.68587 to $0.68579 upon release of the figures, before easing to $0.6797 at the time of writing, down 0.89% for the session.
For the Japanese Yen, the morning’s 4th quarter Tankan survey numbers provided some sense of what lies ahead:
From the numbers, Companies held onto their CAPEX plans for the FY2018 according to forecasts, with manufacturing firms forecasting a 15.6% rise in CAPEX, down 1.6% from the previous quarter, while non-manufacturers revised up forecasts by 2.3% to 13.5%.
While business conditions for large manufacturers remained unchanged, the more pessimistic outlook among big manufacturers will be a concern for the BoJ, with the ongoing U.S – China trade war and a weaker global economic outlook weighing on business optimism.
The Japanese Yen moved from ¥113.581 to ¥113.587 against the U.S Dollar upon release of the figures, before rising to ¥113.45 at the time of writing, a gain of 0.16% for the session.
Out of China,
The Aussie Dollar moved from $0.71957 to $0.71837 upon release of the figures before easing to $0.7183 at the time of writing, a loss of 0.61% for the session, with risk aversion and more evidence of the negative effects of the ongoing U.S – China trade war weighing on the Aussie and Kiwi, while supporting the Yen.
For the EUR, economic data scheduled for release out of the Eurozone is on the heavier side, with key stats including finalized November inflation numbers out of Spain and Italy, Eurozone wage growth figures for the 3rd quarter and prelim December private sector PMI numbers out of France, Germany and the Eurozone.
We will expect the EUR to be sensitive to the wage growth, German manufacturing and Eurozone composite, though there will be some relief following a lowering of tariffs on EU car imports into China.
Outside the numbers, geo-political risk will be an ever present influence, with the U.S President yet to truly threaten tariffs on EU cars, the latest move by China giving the U.S president food for thought.
At the time of writing, the EUR was down 0.03% to $1.1356, with today’s stats the key driver today.
For the Pound, it’s a quiet day on the data front, leaving the markets to consider the events overnight in Brussels and what lies ahead for Theresa May and the Brexit deal, the parliamentary vote now expected to take place in mid-January.
At the time of writing, the Pound down 0.13% to $1.2626, with Brexit chatter the key driver today.
Across the Pond, it’s a busier day ahead on the data front, with key stats scheduled for release including November retail sales and industrial production numbers, prelim December private sector PMI numbers and October’s business inventory numbers.
We will expect the Dollar to respond to the stats, as the markets look to gauge the direction of the economy ahead of next week’s FED meeting and release of the FOMC economic projections for next year.
Outside of the stats, we can expect chatter from the Oval Office to continue to play a hand, trade talks and the wall and a possible government shut down there for consideration through the day.
At the time of writing, the Dollar Spot Index was up 0.08% to 97.137.
For the Loonie, it’s yet another quiet week on the data front, leaving the Loonie to respond to economic indicators out of China, Europe and the U.S, any weak figures likely to be a negative for crude oil prices and the Loonie through the day.
The Loonie was down 0.12% to C$1.3371 against the U.S Dollar at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.