Economic Data Puts the EUR and the Loonie in the Spotlight

Trade data out of China comes in better than expected, while the RBA revised down growth projections. Stats are on the lighter side later today…
Bob Mason
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Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

Key stats included home loan figures out of Australia and trade data out of China

On the monetary policy front, the RBA also released its monetary policy statement.

On the geopolitical risk front, positive updates from Beijing and Washington on trade failed to support risk appetite early on.

For the Aussie Dollar

According to the ABS, home loans rose by 1.4% in September, month-on-month, and following on from a 1.8% rise in August. Economists had forecast a 1.3% increase.

On the monetary policy front, salient points from the RBA monetary policy statement included:

  • The RBA once more downwardly revised economic growth forecasts for this year, from 2.4% to 2.3%. This was attributed to a downward revision of household consumption and real household disposable income forecasts.
  • Through the first half of next year, growth was also downwardly revised from 2.7% to 2.6%.
  • The RBA downwardly revised its outlook on wage growth for the current year from 2.3% to 2.2%.
  • On the policy front, it was noted, however, that any further policy easing could convey an overly negative view of the economic outlook.
  • In spite of these concerns, the board remained prepared to cut rates further should lower rates be needed to support growth in the economy, full employment and to achieve the medium inflation target over time.
  • On the inflation front, the Board had previously forecasted that inflation would hit 2% by mid-2021. The latest forecast has inflation at 1.9% through 2021.
  • Looking at business investment, this was also revised downwards for the current year, from 4.1% to 3.2%.
  • The RBA also revised down dwelling investment from -9.0% to -11.3%.

The Aussie Dollar moved from $0.69010 to $0.68913 upon release of the figures and the RBA monetary policy statement. At the time of writing, the Aussie Dollar was down by 0.22% to $0.6883.

Out of China

The USD trade surplus widened from $39.65bn to $42.81bn in October. Exports fell by just 0.9%, which was better than a forecasted fall of 3.9%. Imports fell by 6.4%, coming in ahead of a forecasted 8.9% fall.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥109.22 against the U.S Dollar, while the Kiwi Dollar was down by 0.02% to $0.6365.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. September trade data is due out of Germany that will provide direction later this morning.

Of less influence on the day, barring dire numbers, are 3rd quarter non-farm payroll figures out of France.

At the time of writing, the EUR was up by 0.02% to $1.1052.

For the Pound

It’s a quiet day ahead on the data front. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the markets to further respond to Thursday’s BoE policy decision and forward guidance.

On the geopolitical risk front, UK politics will continue to grip the Pound.

At the time of writing, the Pound was down by 0.02% to $1.2815.

Across the Pond

It’s another quiet day ahead on the economic calendar. Prelim Michigan consumer expectations and sentiment figures are due out for November. With forecasts Dollar positive, any soft numbers would likely test the Dollar late in the day.

Outside of the numbers, geopolitics will continue to be an influence on the day, with trade talks in focus.

The Dollar Spot Index was down by 0.03% to 98.112 at the time of writing.

For the Loonie

It’s a busy day on the economic calendar. Key stats due out of Canada include October employment change figures and unemployment rate. September housing start and building permit figures will likely have a muted impact on the Loonie.

With the unemployment rate expected to hold steady at 5.5%, the focus will likely be on the employment change numbers.

Outside of the numbers, chatter on trade will also provide direction for crude oil prices and the Loonie later in the day.

The Loonie was down by 0.08% to C$1.3184, against the U.S Dollar, at the time of writing.

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