It’s a Dollar Day, with many Major Markets still Closed

Earlier in the Day:

Economic data through the Asian session this morning was limited to stats out of Japan, with a number of key markets still closed for the holidays.

The data was on the positive side, with household spending surging by 2.1% in November, well ahead of a forecasted 1.2% rise following October’s 2% slide. Inflation numbers also ticked up, with core inflation rising by 0.9% year-on-year, though still well below the BoJ’s target.

The Yen showed little response to the upbeat numbers, rising from ¥113.302 to ¥113.283 against the Dollar ahead of the BoJ’s November monetary policy meeting minutes’ release.

Minutes from the November meeting showed that the general consensus was for policy to remain untouched, which saw the Yen cough up the minor gains from the upbeat stats to sit at ¥113.33 against the Dollar, at the time of writing.

With trading volumes on the lighter side at this time of the year, it was a relatively flat day for the Asian currencies, with the Aussie Dollar up 0.03% to $0.7719, while the Kiwi Dollar was up 0.11% to $0.7032.

In the equity markets, the Nikkei ended the day down 0.2%, with the CSI300 up 0.25% at the time of writing.

The Day Ahead:

With many European markets closed for the holidays, there are no material stats scheduled for release out of the Eurozone through the day.

Trading is expected to be on the thinner side, which could see some sharp moves over the day, with the markets having to consider events in Spain following last week’s Catalonia elections. How the Spanish government handles any calls for independence will be particularly key, though with many businesses having moved out of the region after the October Independence Referendum, it remains to be seen how much impact further any disruption will in fact have on the economy.

At the time of writing, the EUR was down just 0.02% to $1.1868, with the European equity markets hoping for some easing ahead of tomorrow’s open.

With the UK markets closed for the holidays, there are no stats scheduled for release today, which will leave any direction hinged on sentiment towards Brexit going into the New Year. While there has been plenty of mixed views on the impact of Brexit on the UK economy, there was some upbeat news hitting the wires over the holidays. Economists have suggested that initial forecasts of the likely impact of Brexit on the economy was too pessimistic.

The UK economy has certainly surprised many over the last 18-months, with the Pound recovering to $1.33 levels, but there’s still a long way to go and the effects of inflation on domestic consumption has yet to bear its teeth.

At the time of writing, the Pound was up 0.02% to $1.3374, with little to influence the Pound today.

Across the Pond, the holidays are over and the U.S markets open though volumes will certainly be on the lighter side through the week. Economic data out of the U.S this afternoon includes December’s CB Consumer Confidence figures along with October house price figures. We will expect the Dollar to respond to the consumer confidence numbers, though upside for the Dollar through the day may be off the back of the U.S government managing to avert a shutdown, with the signing of the tax reform bill also there for the markets to continue to consider.

At the time for writing, the Dollar Spot Index was up 0.02% to 93.284. It’s been a rough year for the Greenback, down 8.73% year-to-date and with the U.S administration likely to struggle on policy in the coming year, any upside may be short lived.