Economic Data and the Bank of Canada Put the EUR, the GBP, and the Loonie in the Spotlight

Earlier in the Day:

It was another relatively busy start to the day on the economic calendar this morning. The Aussie Dollar was in focus, with the RBNZ also in action. Later this morning, finalized industrial production figures from Japan will also draw attention.

For the Aussie Dollar

Consumer confidence was in focus this morning, In July, the Westpac Consumer Confidence Index rose by 1.5% to 108.8. Economists had forecast a 2.5% decline to 105.0.

According to the latest Westpac Report,

• A pickup in confidence came in spite of COVID-19 restrictions in Sydney.
• The upside came in response to a marked pickup in confidence in Victoria and WA.

Looking at the sub-components

• Family finances vs a year ago increased by 4.6% to 93.7, with finances vs next 12-months up 2.5% to 109.9.
• Sentiment towards the near-term economic outlook improved, with the economic conditions next 12-months rising by 0.8% to 109.5.
• There was a 3.1% fall in the Economic Conditions next 5-years, however, to 110.5.
• The unemployment expectations index also disappointed, rising by 1.1% to 109.6.
• In spite of this, the time to buy a major household item rose by 3.5% to 120.6.

The Aussie Dollar moved from $0.74430 to $0.744250 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7463.

For the Kiwi Dollar

The RBNZ left the official cash rate unchanged at 0.25% and also left the Funding for Lending programme unchanged, which was in line with market expectations. Catching the markets off guard, however, the RBNZ did agree to end the additional asset purchases under the LSAP programme by 23^rd July.

Salient points from the Rate Statement included:

• The Committee noted that global economic growth continued to recover, with a positive outlook.
• Rising vaccination rates across many countries together with accommodative monetary and fiscal policies supported household spending.
• Ongoing health and economic risks remained, however, as some need to reinstate COVID-19 containment measures.
• Recent economic data indicate the NZ economy remains robust despite international border restrictions.
• Aggregate economic activity is above its pre-COVID-19 level.
• Economic conditions since late 2020 have been persistently stronger than anticipated.
• Employment growth has remained strong, with economic confidence up from their extreme lows.
• Exports and domestic spending have compensated for the absence of international tourists.
• Near-term spikes in inflation are expected to be temporary.
• The Committee agreed that the significant level of monetary policy support in place since mid-2020 could be reduced sooner.
• Members agreed that some monetary stimulus remains necessary to best ensure CPI inflation will be sustained at the 2% target mid-point and that employment is at its maximum sustainable level.

The Kiwi Dollar moved from $0.69690 to $0.70030 upon the decision. At the time of writing, the Kiwi Dollar was up by 0.95% to $0.70140.

For the Japanese Yen

Finalized industrial production figures are due out later this morning.

At the time of writing, the Japanese Yen was up by 0.09% to ¥110.530 against the U.S Dollar.

The Day Ahead

For the EUR

It’s a relatively busy day ahead on the economic data front. Finalized June inflation figures for Spain and Eurozone industrial production figures are due out later this morning.

Expect the industrial production figures for May to draw plenty of attention. The markets have recently become a little concerned over the resilience of the economic recovery. Weak numbers will test support for the EUR.

At the time of writing, the EUR was up by 0.04% to $1.1781.

For the Pound

It’s a busier day ahead on the economic calendar, with UK inflation figures due out later this morning.

With little else for the markets to consider, expect plenty of Pound sensitivity to today’s stats. Softer inflation would ease pressure on the BoE to make a near-term move.

Away from the economic calendar, COVID-19 and the Delta variant will remain a near-term driver.

At the time of writing, the Pound was up by 0.04% to $1.3820.

Across the Pond

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the U.S to provide the markets with direction.

A lack of stats will leave the Greenback in the hands of central bank chatter and market risk sentiment on the day.

At the time of writing, the Dollar Spot Index was down by 0.01% to 92.739.

For the Loonie

It’s a busier day ahead on the economic data front. Finalized manufacturing sales figures for May are due out later today.

We don’t expect the numbers to influence, however, with the Bank of Canada in action this afternoon.

Markets are expecting the BoC to stand pat on policy, so it will boil down to the Bank’s outlook on the economy and any forward guidance on policy.

At the time of writing, the Loonie was up by 0.12% to C$1.2498 against the U.S Dollar.

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