Economic Data and Geopolitics Put the GBP and USD in the Limelight

It’s a busy day ahead, with inflation figures out of the UK and the phase 1 trade agreement signing in focus today.
Bob Mason
Light Board

Earlier in the Day:

It was a particularly quiet day on the Asian economic calendar this morning, with no material stats to provide direction.

While there were no material stats, Bank of Japan Governor Kuroda spoke early on. Kuroda continued to assure the markets that the BoJ will deliver more easing should the need arise. The BoJ Governor added that he expected inflationary pressures to build, though it would take time, with falling oil prices a drag near-term.

Outside of the numbers, geopolitics remained in focus, with the U.S and China scheduled to sign the phase 1 trade agreement later today.

Overnight, details of the phase 1 trade agreement spooked the markets, with tariffs to remain until after the November Presidential Election. In the early hours of this morning, it was also reported that the U.S would be able to block sales to Huawei. This added to concerns over China’s adherence to the terms of the agreement, once in effect.

For the Majors

At the time of writing, the Japanese Yen was up by 0.05% to ¥109.94 against the greenback. The Kiwi Dollar was down by 0.08% to $0.6610, with the Aussie Dollar down by 0.03% to $0.6900.

The Day Ahead:

For the EUR

It’s a busier day ahead on the economic calendar, with the Eurozone’s November industrial production and trade data due out.

Forecasts are mixed for the EUR, with industrial production expected to rise by 0.3%, month-on-month, while the trade surplus is forecast to narrow to €23.3bn.

We would expect any deviation from the industrial production forecast to have the greatest impact on the EUR.

Finalized inflation figures out of France and Spain are also due out, but will likely be brushed aside by the markets.

Outside of the numbers, China and the U.S are due to sign the phase 1 trade agreement later today. Will there any last-minute hiccups?

At the time of writing, the EUR was up by 0.01% to $1.1129.

For the Pound

It’s also a busier day ahead on the economic calendar. December inflation figures are due and will provide direction to the Pound.

Economic data released on Monday supported the more dovish outlook on monetary policy, raising the chances of a rate cut on 30th January.

Today’s inflation figures are unlikely to have too much influence, barring a material shift from the 1.5% annual rate of inflation recorded in November.

On the geopolitical front, Brexit chatter will also be in focus, as will monetary policy. MPC member Saunders is scheduled to speak later this morning.

At the time of writing, the Pound was up by 0.04% to $1.3024.

Across the Pond

It’s a busy day on the data front. Key stats include December wholesale inflation figures and the NY Empire State Manufacturing Index numbers for January.

Expect the figures to influence, though direction will ultimately come from Washington. The market focus will be on the signing of the phase 1 trade agreement and what comes next.

The Dollar Spot Index was up by 0.01% to 97.385 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats scheduled for release to provide the Loonie with direction.

The lack of stats will continue to leave the Loonie in the hands of market risk sentiment and influence on crude oil prices.

The Loonie was down by 0.05% to C$1.3068 against the U.S Dollar, at the time of writing.

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