Economic Data Puts the EUR in Focus Ahead of Day 2 of FED Chair Powell Testimony

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Aussie Dollar was in focus in the early hours, with the RBNZ also in action.

For the Aussie Dollar

Wage growth and construction figures were in focus this morning.

In the 4^th quarter, wages grew by 0.6%, quarter-on-quarter, following a 0.1% rise in the 3^rd quarter. Economists had forecast a 0.3% increase.

Construction work done fell by 0.9% in the 4^th quarter, however, following a 2.6% slide in the 3^rd quarter. Economists had forecast a 1% increase.

The Aussie Dollar moved from $0.79221 to $0.79218 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.40% to $0.7943.

For the Kiwi Dollar

This morning, the RBNZ left monetary policy unchanged, which was in line with market expectations.

With policy left unchanged, the RBNZ Rate Statement was the key driver.

Salient points from the Rate Statement included:

• The Committee agreed to leave the OCR at 0.25%, and the LSAP Programme of up to NZ$100bn and the Funding for Lending Programme (FLP) operation unchanged.
• While global economic activity has increased, the lift in activity has been uneven between and within countries.
• The initiation of COVID-19 vaccine programmes is positive for health and economic activity.
• There remains a significant period before widespread immunity is achieved, however.
• With international border restrictions in place, economic uncertainty will remain heightened.
• In NZ, households and businesses have benefitted from the easing of COVID-19 restrictions.
• Some temporary factors were currently supporting consumer price inflation and employment. These include higher oil prices, supply disruptions, spending catchup, and fiscal stimulus.
• The economic outlook remains highly uncertain, due to future health-related social restrictions.
• Ongoing uncertainty is expected to constrain business investment and household spending growth.
• The Committee agreed that inflation and employment would likely remain below its remit targets over the medium term in the absence of prolonged monetary stimulus.
• Members were also prepared to provide additional monetary stimulus if necessary.
• It was also noted that the operational work to enable the OCR to be taken negative, if required, was now complete.

The Kiwi Dollar moved from $0.73472 to $0.73583 upon release of the RBNZ Statement. At the time of writing, the Kiwi Dollar was up by 0.55% to $0.73753. Next up is the RBNZ press conference…

Elsewhere

At the time of writing, the Japanese Yen was down by 0.15% to ¥105.41 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. 2^nd estimate GDP numbers for German are due out later this morning. Following revisions to the Eurozone numbers, expect any revision to 4^th quarter to numbers to influence.

At the time of writing, the EUR was up by 0.07% to $1.2158.

For the Pound

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

The lack of stats will leave the Pound in the hands of market risk sentiment on the day.

We would expect any downside to be limited, however, with plans to ease COVID-19 restrictions positive for the Pound.

At the time of writing, the Pound was up by 0.53% to $1.4188.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. New home sales figures for January are due out later today.

We don’t expect the numbers to provide the Dollar or the broader markets with direction, however.

Chatter from Capitol Hill will likely be the key driver on the day.

At the time of writing, the Dollar Spot Index was down by 0.13% to 90.050.

For the Loonie

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

The lack of stats will leave the Loonie in the hands of crude oil inventory numbers on the day.

At the time of writing, the Loonie was up by 0.17% to C$1.2565 against the U.S Dollar.

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