Economic Data Puts the EUR and the Loonie in Focus as Inauguration Day Nears

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early this morning.

For the Kiwi Dollar

Business confidence picked up in the 4^th quarter of 2020.

According to the NZIER Quarterly Report,

• A net 16% of businesses expect a deterioration in general economic conditions over the coming months. This was lower than the 38% in the previous quarter and well below the 68% in March 2020.
• The building sector delivered strong optimism, while other sectors saw some improvement.
• Away from the construction sector, businesses were reportedly still cautious about general economic conditions ahead.
• While demand has improved, firms are still finding it difficult to pass on rising costs by raising prices.
• Despite resulting weak profitability, increased certainty about the outlook supported hiring and investment.
• A net 15% of firms are planning to hire in the next quarter, with a net 10% planning to invest in plant and machinery.

The Kiwi Dollar moved from $0.71122 to $0.71118 upon release of the figures that preceded retail sales figures.

In December, electronic card retail sales rose by 3.5% compared with December 2019. In November, sales had increased by 1.4%, year-on-year.

According to NZ Stats,

• Spending on groceries, furniture, and electronics drove sales, while accommodation and fuel spending dragged.
• Retail spending rose in 4 of the 6 industries in December 2020 compared with December 2019.
• Consumables had the largest retail sector increase, rising by 7.5%, followed by spending on durables, which increased by 6.7%.
• Spending on eating out increased by a relatively modest 1.8%. In spite of containment measures, domestic tourism delivered support.
• By contrast, spending on hotels, motels, and other accommodation was down by 32% due to a lack of international tourists.

The Kiwi Dollar moved from $0.71120 to $0.71051 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.25% to $0.7128.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.02% to ¥103.71 against the U.S Dollar, while the Aussie Dollar was up by 0.22% to $0.7698.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized December inflation figures from Germany and ZEW economic sentiment figures for Germany and the Eurozone are due out.

Expect Germany’s ZEW Economic Sentiment figure for January to be the key driver.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will also influence.

On the political front, the Italian government faces a Senate vote later today that will decide Conte’s fate. On Monday, the Chamber of Deputies voted in favor of Conte’s government following the coalition breakdown.

A political crisis on top of the COVID-19 pandemic would pressure the EUR.

At the time of writing, the EUR was up by 0.09% to $1.2088.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

The lack of stats will continue to leave COVID-19 news to provide direction.

At the time of writing, the Pound was up by 0.06% to $1.3595.

Across the Pond

It’s another particularly quiet day ahead on the economic calendar after Monday’s market close.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.713.

For the Loonie

It’s a relatively busy day on the economic data front. Manufacturing sales and wholesales figures for November are due out later today.

The numbers are unlikely to have a material impact on the Loonie, however.

COVID-19 news updates from China and the U.S will likely remain the key drivers on the day.

At the time of writing, the Loonie was up by 0.17% to C$1.2735 against the U.S Dollar.

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