It’s All Eyes on the G20 Summit – Will Trump Shock and Awe once more?

Earlier in the Day:

Economic data released through the Asian session this morning was on the heavier side, with key stats released including October retail sales figures out of Japan, private new CAPEX figures out of Australia and business confidence numbers out of New Zealand, putting the Asian majors into action early on in the session.

For the Japanese Yen, retail sales jumped by 3.5% in October year-on-year following October’s 2.2% rise, coming in well ahead of a forecasted 2.7% rise.

The Japanese Yen moved from ¥113.546 to ¥113.558, against the U.S Dollar, upon release of the figures, before rising to ¥113.47 at the time of writing, a gain of 0.18% for the session, the better than expected numbers providing support to a 4^th quarter recovery in the Japanese economy.

For the Kiwi Dollar, the November ANZ business confidence index came in at -37.1%, which was unchanged from the previous month.

• The figure shows that a net 37% of those surveyed expect general business conditions to deteriorate in the year ahead.
• Firms’ outlook of their own activity rose by 1 point to a net 8% expecting improvement.
• The retail sector remained the least positive at 0%, while the construction sector became the most optimistic for the first time since March, sentiment jumping by 22 points to +22%.
• A net 4% of firms expect to reduce investment, down 1%.
• Employment intentions rose by 2% to +2%.
• Profit expectations rose by 1% to -14%, the agriculture sector the most pessimistic.
• A net 31% of businesses expect access to credit to deteriorate, which was unchanged from the previous month.
• Companies’ price intentions fell by 4 points to +28%, attributed to a stronger Kiwi Dollar and the pullback in crude oil prices.
• Construction intentions rebounded, residential construction intentions up 24 points to +29%, with commercial up 41 points to +17%.

The Kiwi Dollar moved from $0.68671 to $0.68590 upon release of the figures, before easing to $0.6845 at the time of writing, a loss of 0.38% for the session.

For the Aussie Dollar, private new capital expenditures fell by 0.5% in the 3^rd quarter quarter-on-quarter, coming up short of a forecasted 1%, while continuing on from a revised 2^nd quarter 0.9% decline.

According to the ABS:

• Expenditures on building and structures tumbled by 2.8%, offsetting a 2.2% rise in expenditure on equipment, plant and machinery.
• Year-on-year, a 7% slide in expenditures on building and structures was also a drag, with a 7.7% jump in expenditures on equipment, plant and machinery limiting the headline figure to just a 0.6%.
• Looking at expected expenditure, Estimate 4 for the period 2018-19 was 4.4% higher than for Estimate 4 2017-2018 and 11.3% higher than Estimate 3 for 2018-2019.

The Aussie Dollar moved from $0.73032 to $0.73025 upon release of the figures before easing to $0.7297 at the time of writing, a loss of 0.12% for the session, the Aussie Dollar taking little comfort from the outlook on spending and better than expected spending on equipment, plant and machinery.

Looking across at the equity markets, the influence of FED Chair Powell’s views on where monetary policy normalization sits on the U.S equity markets filtered through to the Asian markets this morning, the Nikkei leading the way in spite of a stronger Yen, with the ASX200, CSI300 and Hang Seng all seeing more than 0.3% gains at the time of writing, the gains somewhat subdued ahead of the G20 Summit that kicks off today and the heavily anticipated F2F between Trump and Chinese Premier Xi

The Day Ahead:

For the EUR, it’s a busy day ahead on the data front, with key stats scheduled for release including French consumer spending and GDP numbers, November prelim inflation and unemployment figures out of Germany and business confidence figures for the Eurozone.

Of material influence with the unemployment and business confidence figures, barring a downward revision to French GDP numbers, the EUR hanging on in the wake of FED Chair Powell’s policy related comments.

At the time of writing, the EUR was up 0.07% to $1.1374, with today’s stats and geo-politics the key drivers through the day.

For the Pound, there are no material stats scheduled for release, leaving the Pound in the hands of Brexit chatter, with the BoE’s economic forecast based on Theresa May’s Brexit deal adding to an already hostile response to The Deal, the BoE concluding that Britain would be better off within the EU than on its own.

The assessment could weigh on the Pound through the day, with plenty of chatter anticipated following the release of the analysis.

At the time of writing, the Pound was up 0.05% at $1.2832, with Brexit news the key driver through the day.

Across the Pond, economic data scheduled for release includes the FED’s preferred Core PCE Price Index figures for October, personal spending, pending home sale and the weekly jobless claims numbers.

Following FED Chair Powell’s policy comments that pinned back the Dollar late in the day, we can expect plenty of market sensitivity towards the inflation numbers, with anything in line with or worse than forecasts favouring a weaker Dollar, though much will depend upon the FOMC meeting minutes due out later in the day.

At the time of writing, the Dollar Spot Index was up 0.01% to 96.8, with today’s stats, the minutes and chatter from the G20 being the key drivers ahead of tomorrow’s G20 Summit..

For the Loonie, 3^rd quarter current account figures are scheduled for release, which are unlikely to have a material impact, with sentiment towards the global economic outlook and the direction of crude oil prices to influence through the day.

The Loonie was down 0.05% to C$1.3381 against the U.S Dollar at the time of writing.