It’s all about the USD, with Stats, Trump and a Possible Shutdown to Look out for

Earlier in the Day:

Economic data released through the Asian session this morning was limited to November national inflation figures out of Japan.

For the Japanese Yen, the annual rate of core inflation came in at 0.9%, the rate of inflation easing from an October 1%, while also falling short of a forecasted 1%.

• Weighing on core inflation in November were furniture and household utensils, prices falling by 0.7% and prices for housing, which fell by 0.1%.
• Easing prices for transportation & communication also contributed to the softer number.
• On the upside, fuel, light and water charges rose by 5%, with prices for medical care up 1.2% and prices for culture and recreation up 1%.
• Prices for goods rose by 1.4%, while prices for services rose by just 0.3%.

The Japanese Yen moved from ¥111.55 to ¥111.137 against the Dollar upon release of the figures, the lack of inflationary pressures in line with BoJ Governor Kuroda’s outlook shared at the BoJ press conference on Thursday.

At the time of writing, the Yen stood at ¥111.377, a partial recovery in the Dollar weighing early on in the day.

Elsewhere, the Aussie Dollar found support in spite of the risk aversion through the session, supported by an uptick in iron ore prices, up 0.08% to $0.7114, while Kiwi Dollar was down 0.06% to $0.6772.

The Day Ahead:

For the EUR, economic data scheduled for release through the day is on the lighter side, with key stats including January consumer sentiment figures out of Germany and November consumer spending numbers out of France.

We would expect both sets of numbers to have some impact on the EUR, though sentiment towards the Dollar will have the greatest influence on the pair through the day, the markets now moving on from the political uncertainty of the Italian coalition government, bringing the Eurozone’s economic outlook and ECB policy to the forefront.

There’s always Trump to consider, who could start talking of tariffs on EU cars, though things have been on the quieter side of late, with economic indicators out of the U.S doing his trade war tactics few favours.

At the time of writing, the EUR was flat at $1.1446, with market risk sentiment to provide direction through the day.

For the Pound, economic data scheduled for release includes 3^rd quarter, finalized GDP and business investment figures, current account numbers and the BoE’s quarterly bulletin.

Barring deviation from the prelim 3^rd quarter numbers, we would expect the BoE’s quarterly bulletin to have the greatest influence from the economic calendar, while the prospect of a no deal departure from the EU continues to plague the Pound, pinning back any potential upside from the data side.

At the time of writing, the Pound up 0.10% to $1.2623, with chatter from Parliament and Brexit noise the key drivers today.

Across the Pond, economic data is on the heavier side, with key stats scheduled for release including November durable goods orders figures, finalized 3^rd quarter GDP numbers, the FED’s preferred Core PCE Price Index numbers for November, finalized consumer sentiment figures for December and November personal spending numbers.

Barring deviation from 2^nd estimate GDP numbers, we would expect core durable goods orders and the FED’s preferred inflation measure to have the greatest influence, while any disappointing personal spending figures will also have an impact, the stats skewed in favour of the Dollar, supported by a forecasted rise in inflationary pressures.

Outside the numbers, market risk sentiment will also influence, the market still reeling from the FED policy outlook and Powell’s Wednesday press conference.

At the time of writing, the Dollar Spot Index was up 0.20% to 96.468, the Greenback clawing back some of Thursday’s losses in the early hours.

For the Loonie, economic data scheduled for release includes October retail sales and GDP numbers, with the BoC’s business outlook survey due out later in the day. We can expect the stats to have a material influence on the Loonie, following the latest BoC policy decision and uncertainty raised over the economic outlook.

Outside of the numbers, crude oil prices will influence, a pickup in crude oil prices in the early hours providing much needed support, offsetting U.S Dollar strength.

The Loonie was up 0.01% to C$1.3508 against the U.S Dollar at the time of writing.