China Trade Data, U.S Nonfarm Payrolls, and Geopolitics in Focus

Earlier in the Day:

It’s was a busier start to the day on the economic calendar this morning.  The Japanese Yen and Aussie Dollar were in action early this morning. Later this morning, trade data from China will also be of influence.

Away from the economic calendar, updates on the U.S stimulus package continued to be an area of focus as the markets readied for today’s U.S nonfarm payroll numbers.

For the Japanese Yen

Household spending jumped by 13% in June, month-on-month, reversing a 0.1% decline from May. Economists had forecast a 7.5% increase. Year-on-year, household spending was down by 1.2%, following a 16.2% slide in May. Economists had forecast a 7.5% slide.

According to the Statistic Bureau,

• Spending on furniture & household utensils jumped by 27.4%, year-on-year.
• There were also large increases in spending on housing (6.5%) and fuel, light, and water charges (6.6%).
• Spending on culture & recreation (-21.2%) weighed, however.
• There were also sizeable declines in spending on transportation & communication (-6.0%), clothing & footwear (-6.0%), and on education (-3.5%).

The Japanese Yen moved from ¥105.525 to ¥105.543 upon release of the figures. At the time of writing, the Japanese Yen was flat at ¥105.55 against the U.S Dollar.

For the Aussie Dollar

The RBA released its Statement of Monetary Policy this morning, following Tuesday’s rate statement. Of interest was the RBA’s economic outlook scenarios that the rate statement had referenced on Tuesday:

• Baseline scenario assumes heightened restrictions in Victoria are in place for the 6-weeks and then gradually eased.
  • GDP is forecast to contract by around 6% in 2020 and then grow by 5% in 2021.
  • The RBA forecasts that the unemployment rate will rise to almost 10% over the next 6-months and then ease to 7%.
  • Underlying inflation is projected to remain below 2% over the next couple of years.
• A stronger economic recovery is possible if faster progress is made in controlling the virus near-term.
  • Positive health outcomes would limit the damage to consumer and business confidence, supporting a speedier economic recovery.
  • Here, the assumption is that the virus be rapidly controlled domestically and activity restrictions are lifted.
  • This scenario would lead to a faster recovery in consumption, investment, and employment.
• A downside scenario is plausible should Australia face further periods of outbreaks and restrictions, and there is a fresh spike globally.
  • A recovery in service exports would be delayed further and consumer spending would continue to decline.
  • Business investment would fall sharply and domestic activity would take much longer to recover.
  • As a result, the unemployment rate would remain close to its peak throughout 2021.

The Aussie Dollar moved from $0.72224 to $0.72247 upon release of the statement. At the time of writing, the Aussie Dollar was down by 0.11% to $0.7228.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.09% to $0.6682.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include June industrial production and trade data from Germany. 2^nd quarter French non-farm payrolls are also due out later this morning.

We would expect the industrial production figures to have the greatest impact on the day.

Away from the economic calendar, geopolitics will also influence throughout the day.

At the time of writing, the EUR was down by 0.07% to $1.1869.

For the Pound

It’s a quieter day ahead on the economic calendar, with no material stats due out to provide direction.

Expect Brexit chatter and any updates on bilateral trade negotiations with key trading partners to influence on the day.

At the time of writing, the Pound was down by 0.05% to $1.3137.

Across the Pond

It’s a busy day ahead for the U.S Dollar. Key stats include July’s nonfarm payroll figures and the unemployment rate.

With the weekly jobless claims continuing to paint a grim picture, expect plenty of sensitivity to today’s figures.

Away from the economic calendar, expect any chatter from the U.S administration to also influence on the day.

At the time of writing, the Dollar Spot Index was up by 0.06% to 92.848.

For the Loonie

After a quiet week, it’s a busy day ahead on the economic calendar. July employment figures are due out along with the Ivey PMI.

Expect the employment figures to have the greatest impact on the day. We would also expect Loonie sensitivity to the economic data from the U.S. Any weak numbers would likely pin back the Loonie.

On the geopolitical risk front, the markets will also be looking to see how Canada retaliates to the latest tariffs.

The U.S administration just hit Canada with a 10% levy on some aluminum products in spite of the trade agreement.

At the time of writing, the Loonie was down by 0.09% to C$1.3319 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.