It’s a Busy Day Ahead on the Data Front and It’s Departure Day for Britain

Earlier in the Day:

It was a busy day on the Asian economic calendar this morning. The Aussie Dollar and Japanese Yen were in action in the early part of the day.

From Japan, retail sales, inflation, and industrial production figures were in focus. Out of Australia, wholesale inflation and private sector credit numbers also garnered attention. From China, the private sector PMI numbers for January were also in focus.

A shift in sentiment towards the coronavirus late in the U.S session provided support to riskier assets early on.

The coronavirus has continued to spread, in spite of the best efforts of Beijing, leading to increased cases and a rising death toll that weighed on risk appetite.

On Thursday, the World Health Organization met to review its classification of the alert status of the coronavirus. After raising its classification to high risk on Monday, the WHO raised its classification to Emergency Level on Thursday.

The escalation came after the WHO called on the world to be on alert to deal with the spread of the coronavirus. Greater international coordination is considered positive for now.

For the Japanese Yen

January inflation figures kicked things off this morning. Japan’s core annual rate of inflation softened from 0.8% to 0.7% in January. Economists had forecast for inflation to hold steady at 0.8%.

According to consumer price figures released by the Ministry of Internal Affairs and Communication,

• A slide in prices for education (-6.1%) and fuel, light, and water charges (-1.7%) weighed in January.
• Support came from rising prices for clothes and footwear (+3.3%), culture and recreation (+1.9%), and furniture and household utensils (+1.7%).
• There were also price increases for medical care (+1.3%) and transportation and communication (+1.3%).

The Japanese Yen moved from ¥108.919 to ¥108.916 upon release of the figures that preceded industrial production and retail sales figures.

According to the Ministry of Economy, Trade, and Industry, retail sales fell by 2.6% in December, year-on-year, following a 2.1% slide in November. Economists had forecast a 1.8% decline.

Industrial production increased by 1.3% in December, according to prelim figures. Economists had forecast a 0.7% rise. In November production had fallen by 1.0%.

According to the Ministry of Economy, Trade, and Industry,

Industries that mainly contributed to the decrease were:

• Production machinery.
• General-purpose and business orientated machinery.
• Electronic parts and devices

Industries that mainly contributed to an increase were

• Motor vehicles.
• Transport equipment (excl. motor vehicles).
• Ceramics, stone and clay products.

The Japanese Yen moved from ¥108.908 to ¥109.838 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.10% to ¥109.07 against the U.S Dollar

For the Aussie Dollar

The annual rate of wholesale inflation eased from 1.6% to 1.4% in the 4^th quarter, which was in line with forecasts. Quarter-on-quarter, the producer price index rose by 0.3%, following a 0.4% rise in the 3^rd quarter. Economists had forecast a 0.3% rise.

According to figures released by RBA, total credit increased by 0.2%, month-on-month, in December. In November, credit had also risen by 0.2%.

• Housing credit increased by 0.3%, which was at the same pace as in November.
• Personal credit fell by 0.5%, which was also at the same pace as in November.
• Year-on-year, total credit was up by 2.4%.
• While personal credit was down by 5.1%, housing credit was up by 3.1% in December.

The Aussie Dollar moved from $0.67123 to $0.67172 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6722.

Out of China

The NBS Composite PMI fell from 53.4 to 53.0 in January, economists had forecast for the PMI to hold steady at 53.4. The downside came off the back of a fall in the manufacturing PMI from 50.2 to 50.0. For the non-manufacturing sector, activity picked up, with the PMI rising from 53.5 to 54.1.

The Aussie Dollar moved from $0.67209 to $0.67243 upon release of the figures, with China’s manufacturing sector avoiding a contraction at the turn of the year.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.02% to $0.6489.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats due out of the Eurozone include Germany and French consumer spending numbers and the Eurozone’s 4^th quarter GDP numbers.

At the last ECB press conference, ECB President Lagarde was less positive about the economic outlook than the markets.

Today’s figures will shed more light on how the economy performed and whether there are any more cracks at the turn of the year.

While prelim inflation figures out of Spain, Italy, France, and the Eurozone are also due out, we expect the GDP numbers and retail sales figures to have the greatest impact.

Outside of the numbers, any shift in sentiment towards the coronavirus will also influence on the day.

At the time of writing, the EUR was down by 0.02% to $1.1030.

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 direction to the Pound.

After the BoE vote count that failed to meet market expectations on Thursday, the focus will return to Brexit.

It’s Britain’s last day as a member of the EU and the Establishment failed in its quest to reverse Britain’s desire and perseverance to leave.

While no fanfare is expected today, we could hear Scottish calls for independence…

At the time of writing, the Pound was up by 0.07% to $1.3102.

Across the Pond

It’s a particularly busy day on the data front.

Key stats due out of the U.S include December inflation and personal sending figures and January’s Chicago PMI.

Of less influence on the day will be finalized consumer sentiment figures for January and 4^th quarter employment cost numbers.

Outside of the stats, expect market risk appetite and impact on U.S Treasury yield spreads to also influence.

Expect the news wires to continue to drive the financial markets in the day ahead.

At the time of writing, the Dollar Spot Index was flat at 97.866.

For the Loonie

It’s a busier day ahead on the economic calendar, with December RMPI and November GDP numbers due out.

Last week, the BoC opened the door to a rate cut should economic indicators continue to disappoint. Expect today’s figures to have a material impact on the Loonie.

A continued contraction in the Canadian economy, coupled with the rising threat of a coronavirus driven slowdown in the global economy would be a heavy blow.

The Loonie was up by 0.08% at C$1.3198 against the U.S Dollar, at the time of writing.