It’s All Eyes on Washington as Trade Talks Resume Later Today

While economic data will bring the EUR, GBP, and USD into focus, a resumption of U.S – China trade talks is the main event of the day.
Bob Mason
USA/Chinese Flag - Old Exective Office Building, Washington, D.C.

Earlier in the Day:

It was a relatively quiet day on the economic calendar through the Asian session this morning.

The Aussie Dollar was in action, with October consumer confidence and August home loan figures providing direction early on.

On the geopolitical risk front, news of China being supportive of a trade agreement failed to spur demand for riskier assets. Trade tensions have been on the rise and China’s support of an agreement comes with a caveat that no further tariffs are introduced.

With talks set to resume later today, some caution was to be expected…

For the Aussie Dollar

The Westpac Consumer Sentiment Index fell by 5.5% to 92.8 in October, reversing a 1.7% rise in September.

According to the Westpac report,

  • The slide came in spite of the RBA’s latest rate cut, which will be of concern when considering the reliance on consumer spending.
  • Global events, including deteriorating U.S – China trade relations, contributed to the weakest confidence since July 2015.
  • Looking at the numbers:
    • The sub-index for family finances vs a year ago fell by 4.9%, with finances for next 12-months down by 3.7%.
    • Economic conditions next 12-months slid by 6.0%, while economic conditions next 5-years slumped by 9.1%. The next 12-months sub-index was down 15.1% year-on-year, while the next 5-years was down by 6.4%.
    • The time to buy a major household item sub-index fell by 4.2% following last month’s 2.8% decline.
    • On the labor market front, the Unemployment Expectations Index fell by 1.3%, while up by 7.3% year-on-year.
    • The Time to buy a dwelling index fell by 5.4%, whilst rising by 13.7% over the year. By contrast, the House Price Expectations Index rose by 5.9%.

The Aussie Dollar moved from $0.67150 to $0.67141 upon release of the figures that preceded the home loan numbers.

Home loans rose by 1.8% in August, following on from a 5% jump in July, according to the ABS. Economists had forecast a rise of 3.6%.

The Aussie Dollar moved from $0.67172 to $0.67165 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.10% to $0.6718.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.16% to ¥107.31 against the U.S Dollar, while the Kiwi Dollar down by 0.0.06% to $0.6289.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar, with German trade data due out of the Eurozone in the day ahead.

Following factory orders and industrial production figures from earlier in the week, the data would need to impress to support the EUR.

On the geopolitical front, Brexit will also be a factor along with any chatter on trade, as trade talks resume later today.

At the time of writing, the EUR was up by 0.10% to $1.0982.

For the Pound

It’s a busy day ahead on the data front. Economic data includes August industrial and manufacturing production, GDP numbers and trade data.

We would expect the manufacturing production and GDP figures to have the greatest influence on the day.

On the geopolitical front, Brexit will continue to be a key driver, however. With EU Summit just over a week away, we can expect the Pound to be particularly responsive to any updates from the EU or Westminster.

From earlier in the day, the UK’s RICS House Price Balance for September had a muted impact on the Pound.

According to the latest survey, the RICS House Price Balance Index rose from -4% to -2% in September.

At the time of writing, the Pound was up by 0.06% to $1.2213.

Across the Pond

It’s a relatively busy day ahead on the economic calendar, with inflation and initial jobless claims figures due out of the U.S later today.

While we can expect the Dollar to respond to the numbers, market sentiment towards the U.S and global economy and geopolitical risk will remain the key drivers.

Any pickup in inflationary pressure is unlikely to shift sentiment towards monetary policy near-term. FED members have become concerned over a likely softening in inflationary pressures. Consumer prices are forecast to rise by 0.2% in September, softer than a 0.3% rise in August.

Jobless claims figures will take a backseat on the day, barring an unexpected rise in claims. The Dollar would need initial weekly claims to hold at sub-230k levels to avoid a sell-off.

The Dollar Spot Index was down by 0.07% to 99.052 at the time of writing, with the overnight FOMC meeting minutes weighing early on.

For the Loonie

It’s a quiet day on the economic calendar. Economic data is limited to August house price figures. Barring particularly dire numbers, we would expect the numbers to have a muted impact on the Loonie.

On the day, the OPEC meeting’s influence on crude oil prices and sentiment towards the global economy will provide direction.

Economic data from the Eurozone and the U.S suggest that a further cut in OPEC output and supply is required.

The Loonie would need the hope of a near-term end to the U.S – China trade war and a cut in the supply crude oil to find support.

The Loonie was down by 0.07% at C$1.3342, against the U.S Dollar, at the time of writing.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US