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Bob Mason
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Earlier in the Day:

Economic data released through the Asian session this morning included 2nd quarter retail sales figures out of New Zealand and 2nd construction work done out of Australia.

For the Kiwi Dollar, retail sales jumped by 1.1% in the 2nd quarter, quarter-on-quarter, which was better than a forecasted 0.4% rise, following the 1st quarter’s 0.1% increase.

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  • 11 of the 15 retail industries had higher sales volumes.
  • Hardware, building and garden supplies had the largest increase, rising by 4.7% off the back of a 0.6% rise in the 1st
  • Food and beverage services rose by 1.7%, recovering from a 1% slide in the 1st.
  • Department store sales and electronic goods sales also saw marked increases, rising by 2.8% and 2.0% respectively.
  • On the downside, supermarket and grocery sales dragged, down by 1.1%, with the fuel industry seeing a 0.7% decline, its 4th consecutive quarterly fall.
  • Other sectors that saw declines were furniture, floor coverings, housewares and textile goods and liquor retailing.
  • Core retail sales increased by 1.4, quarter-on-quarter, coming in ahead of a forecasted 0.8% rise, following a 0.6% increase in the 1st

The Kiwi Dollar moved from $0.66925 to $0.67120 upon release of the figures, before easing to $0.6705 at the time of writing, up 0.39% for the session. The latest numbers providing contrarian views to the RBNZ on the state of the economy.

For the Aussie Dollar, construction work done jumped by 1.6% in the 2nd quarter, coming in ahead of a forecasted 0.7% rise, following a 1st quarter upwardly revised 2.4% increase.

  • Total building work done rose by 2.5% in the quarter, with total engineering work done rising by 0.4%, quarter-on-quarter.
  • While up quarter-on-quarter, construction work done was down 0.1% in the 2nd quarter, year-on-year, with a 7.2% slide in engineering work done dragging on the year-on-year figure.

The Aussie Dollar moved from $0.73592 to $0.73551 upon release of the figures, before rising to $0.7358 at the time of writing, down 0.14% for the session.

Elsewhere, the Japanese Yen was down 0.14% t0 ¥110.46 against the U.S Dollar, erasing gains from the start of the session.

In the equity markets, it was another mixed start to the day, with the Nikkei up 0.46%, recovering from an early drip driven by direction in the Yen and the Hang Seng up 0.42%. Ping An led the way on the Hang Seng, following solid earnings results on Tuesday, with Tencent Holdings up 2.45%, as tech stocks followed the U.S into positive territory.

Meanwhile, the ASX200 and CSI300 saw red at the time of writing, down 0.28% and 0.38% respectively. Mining stocks continued to weigh on the ASX200, BHP and Rio down 1.58% and 1.67% respectively, with the big-4 banks seeing red for a 3rd consecutive day, ultimately pulling the index into the red.

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The Day Ahead:

For the EUR, it’s yet another quiet day ahead on the economic calendar, with no material stats scheduled for release, leaving the EUR in the hands sentiment towards the Dollar and whether the markets buy into the view that Trump can in fact influence the FED.

At the time of writing, the EUR was up 0.01% to $1.1572, with direction coming from the Dollar, a lack of stats out of the Eurozone through the first half of the week providing the EUR with support.

For the Pound, with no material stats scheduled for release, the markets will be looking for updates on Brexit negotiations for direction, the recent uptick in the Pound coming off the back of Trump and FED chatter and a lack of negative news from Brussels, which could shift at any time.

At the time of writing, the Pound was up 0.04% to $1.2906, with Brexit chatter the key driver through the day.

Across the Pond, economic data out of the U.S is limited to July existing home sale figures that are forecasted to rebound from the June reversal, numbers in line with or better than forecasted will provide some support for the Dollar, though focus will be on the FOMC meeting minutes due out later in the day.

With President Trump refocussing on FED policy, hawkish commentary within the minutes that point to a possible 2 further rate hikes for the year could rile Trump further ahead of Powell’s speech at Jackson Hole on Friday.

Expect some tweeting should the hawks dominate, though Robert Mueller’s progress in his investigation may be an unwanted distraction for Trump and the administration.

At the time of writing, the Dollar Spot Index was down 0.04% to 95.222, with the FOMC meeting minutes and the Oval Office the key drivers through the day.

For the Loonie, June retail sales figures are due out this afternoon that will provide the Loonie with direction, though anything in line with or worse than forecasts will likely weigh, though there’s been little out of Canada on the data front to suggest a shift in BoC tone towards policy.

At the time of writing, the Loonie was up 0.02% to C$1.3034, with today’s data to provide direction along with any update on NAFTA.

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