Economic Data Puts the EUR and the Greenback in the Spotlight

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar was in focus early on, with industrial production figures from Japan due out later this morning.

For the Aussie Dollar

House price figures and the RBA meeting minutes were in focus.

In the 4^th quarter, the House Price Index increased by 3%, following a 0.8% rise in the 3^rd quarter. Economists had forecast a 2% rise.

According to the ABS,

• Canberra and Melbourne led the way, with residential property prices rising by 3.4% in both states, quarter-on-quarter.
• A 2.2% rise in Darwin was the weakest across the 8 capital cities in the 4^th
• Year-on-year, prices rose by 3.6%, with a 6.4% jump in Hobart leading the way.

The Minutes

This morning, the RBA meeting minutes addressed market concern over reinflation and reiterated the low for longer mantra on cash rates.

Salient points from the minutes included:

• The outlook for the global economy has improved over prior months.
• While the path ahead was likely to remain bumpy and uneven, there were better prospects of a sustained recovery.
• Inflation remained low and below central bank targets in many countries.
• In Australia, the economic recovery was well under way and had been stronger than previously expected.
• There had also been a strong growth in employment and a welcome decline in the unemployment rate to 6.4%.
• Members noted that how households and businesses adjust to the tapering of some fiscal support measures was a key issue near-term.
• Wage and price pressures had been subdued and would likely remain so for several years.
• While annual CPI inflation was expected to rise temporarily to 3%, in underlying terms inflation was expected to remain below 2% over both 2021 and 2022.
• Members affirmed that the cash rate would be maintained at 10 basis points for as long as necessary.
• Negative policy rate continued to be extraordinarily unlikely.
• The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range.
• For this to occur, wages growth would need to be materially higher than it is currently.
• This would require significant gains in employment and a return to a tight labor market.
• The Board does not expect these conditions to be met until 2024 at the earliest.

The Aussie Dollar moved from $0.77472 to $0.77464 upon release of the figures and minutes. At the time of writing, the Aussie Dollar was down by 0.06% to $0.7750.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.10% to $0.7201, while the Japanese Yen was down by 0.05% to ¥109.18 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a busy day on the economic calendar. Economic sentiment figures for Germany and the Eurozone are due out.

Finalized French and Italian inflation figures for February are also due out but will likely have a muted impact on the EUR.

Away from the economic calendar, COVID-19 news is back in focus and will need monitoring. The new wave of shutdowns would likely continue to test EUR support.

At the time of writing, the EUR was flat at $1.1929.

For the Pound

It’s also another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

With no stats to consider, the Pound will also be in the hands of market risk sentiment on the day.

Government bond yields and COVID-19 vaccine news will remain the areas of focus

At the time of writing, the Pound was down by 0.08% to $1.3889.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include retail sales and industrial production figures for February. Expect the retail sales figures to have the greatest influence on the day.

Import and export prices and business inventory figures are also due out but would likely have a muted impact on the markets.

Away from the economic calendar, FOMC member chatter and news from Capitol Hill will also need monitoring.

At the time of writing, the Dollar Spot Index was down by 0.02% to 91.817.

For the Loonie

It’s a relatively quiet day on the economic calendar. Foreign securities purchase figures are due out late in the day.

We don’t expect too much influence from the numbers, however. Market risk sentiment will remain the key driver ahead of crude oil inventory numbers on Wednesday.

At the time of writing, the Loonie was down by 0.04% to C$1.2477 against the U.S Dollar.

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