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Bob Mason

Earlier in the Day:

It was another relatively busy day on the Asian economic calendar in the earlier hours of this morning.

Key stats included November retail sales figures out of Australia and household spending figures out of Japan.

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Outside of the stats, geopolitics remained in focus. The Asian markets responded further to the easing tensions in the Middle East that led the U.S majors to record highs on Thursday.

For the Japanese Yen

Household spending rose by 2.6%, month-on-month, following on from an 11.5% slide in October. Economists had forecast a 9.8% decline. Year-on-year, spending fell by 2%, however, which was worse than a forecasted 2.5% rise. In October, spending had fallen by 5.1%.

According to the Statistic Bureau,

  • There were heavy falls in spending on education (-17.1%), furniture & household utensils (-13.1%), clothing & footwear (-6.8%), and housing (-4.1%).
  • Spending on fuel, light & water charges (-1.5%) and on transportation & communication (-0.1%) also declined.
  • There were increases in spending on medical care (6.0%), culture & recreation (3.4%), and food (0.2%), however.

The fall in spending, year-on-year, came in spite of disposable income rising by 2.7%, supported by a 1.9% rise in income.

The Japanese Yen moved from ¥109.52 to ¥109.517 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.04% to ¥109.56 against the greenback.

For Aussie Dollar

Retail sales rose by 0.9% in November, coming in well ahead of a forecasted 0.2% increase. In October, retail sales had stalled.

According to the ABS,

  • Black Friday sales delivered in November, which surpassed previous sales figures.
  • There were sizeable increases in the sales of clothing, footwear and personal accessories (3.1%) and department stores (3.4%).
  • Support also came from food retailing (0.5%), household goods retailing (1.2%), and cafes, restaurants, and takeaway food services (0.9%).
  • Other retailing fell by 0.5% to partially offset the gains.

The Aussie Dollar moved from $0.68558 to $0.68712 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.12% to $0.6866.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.09% to $0.6610.

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The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in hands of geopolitics and sentiment towards the economic outlook.

Brexit and the threat of tariffs remain curveballs for the Eurozone economy and the ECB, though with Trump needing the EU’s support to tackle the Middle East, there’s an incentive for the U.S President to dangle the carrot…

At the time of writing, the EUR was up by 0.03% to $1.1109.

For the Pound

It’s also a quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

The lack of stats will leave the Pound in the hand of MPs and the UK Parliament. Johnson’s withdrawal bill sailed through ensuring that Britain cannot extend the transition period.

That ultimately means that, by hook or by crook, Britain will be on its own on 1st January 2021. While there’s plenty of incentive for Johnson to deliver a deal, the EU will also need Britain to remain a key trading partner…

Near-term, we can expect the focus to return to economic indicators.

At the time of writing, the Pound was up by 0.04% to $1.3072.

Across the Pond

It’s a busy day on the data front. Key stats include December’s unemployment rate and nonfarm payroll and wage growth figures.

Expect the numbers to have a material influence on the Dollar, with plenty of optimism over the U.S economy surrounding the U.S Dollar.

Outside of the numbers, geopolitics will remain in focus to also provide direction on the day.

The markets will be looking for Iran to accept the Olive Branch extended by the U.S President on Wednesday.

On Thursday, the news wires reported that the U.S had approached the UN to state its willingness to enter into talks to avoid an escalation in hostilities.

The Dollar Spot Index was up by 0.16% to 97.45 on Thursday.

For the Loonie

It’s a relatively busy day on the economic calendar, with employment figures due out.

Expect the Loonie to be particularly sensitive to the numbers.

Forecasts are Loonie positive, with a pickup in hiring forecasted to lead to a fall in the unemployment rate to 5.8%.

Numbers in line with or better than forecast would support Gov Poloz’s previous comments in relation to monetary policy. Poloz stated late last year that interest rates were at the right level to support the economy.

The Loonie was down by 0.06% to C$1.3064 against the U.S Dollar, at the time of writing.

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