Nonfarm Payrolls Put the U.S Dollar and the U.S Economy in the Spotlight

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Japanese Yen and Aussie Dollar were in action.

For the Japanese Yen

Household spending figures were in focus early in the day.

In December, household spending rose by 0.9%, month-on-month, partially reversing a 1.8% decline in November. Economists had forecast a 1.9% fall.

Year-on-year, household spending fell by 0.60%, partially reversing a 1.1% increase from November. Economists had forecast a 2.4% slide.

According to the Statistic Bureau,

• Spending surged on education (+16.4%), housing (+15.4%), and furniture & household utensils (+13.6%).
• There was also a 2.9% increase in spending on fuel, light, & water charges.
• Spending on clothing & footwear (-11.8%) and culture & recreation (-11.4%) saw heavy falls, however.
• There were also declines in spending on transportation & communication (-9.0%) and medical care (-2.6%).

The Japanese Yen moved from ¥105.551 to ¥105.553 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.03% to ¥105.51 against the U.S Dollar.

For the Aussie Dollar

Retail sales and the RBA’s monetary policy statement were in focus this morning.

In December, retail sales slid by 4.1% month-on-month, upwardly from a prelim 4.2% fall. In November, retail sales had jumped by 7.1%.

According to the ABS,

• Following November’s rebound, 5 of the 6 industries saw sales decline in December.
• Household goods retailing (-8.3%), clothing, footwear & personal accessory retailing (-9.4%), and department stores (-12.5%) saw heavy declines.
• Food retailing (-1.7%) and other retailing (-4.4%) saw relatively modest declines in percentage terms.
• Cafes, restaurants, and takeaway food services saw sales rise by 3.2% to buck the trend.
• Despite the decline, retail turnover was up by 9.6% compared with December 2019.
• In the December quarter, retail sales volumes rose 2.5%, following a 6.5% increase in the 3^rd quarter.

Salient points from the RBA’s statement on monetary policy included:

• Growth in Australia’s major trading partners is expected to be a little stronger than at the time of the November statement.
• China and a few advanced east Asian economies stronger outlook than the rest of the world, as a result of more successful suppression of the COVID-19 pandemic.
• The Australian economy is forecasted to contract by 2% in 2020 and expand by 3.5% in 2021.
• Unemployment is expected to fall gradually to end 2021 at 6%.
• Both forecasts were revised upwards, with both expected to reach pre-pandemic levels 6-12 months earlier than previously forecast.
• The economy is now transitioning beyond the initial ‘snapback’ phase supported by the faster easing of restrictions and policy support.
• Uncertainty remains, however, over the nature and the speed of the next phase of the domestic recovery.

The Aussie Dollar moved from $0.76018 to $0.76028 upon release of the data. At the time of writing, the Aussie Dollar was down by 0.04% to $0.7597.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.04% to $0.7153.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar.

German factory orders for December and French nonfarm payrolls for the 4^th quarter will be in focus.

With lockdown measures in France expected to weigh on labor market conditions, German factory orders will likely have the greatest impact.

At the end of the year, Germany’s Manufacturing PMI survey for December had reported a continued rise in new orders.

New order growth, reportedly unchanged from November, was among the quickest seen since data collection began in 1996.

This should therefore translate into a further rise in factory orders from November’s 2.3% increase. Economists have forecasted a 1.2% decline, however.

At the time of writing, the EUR was up by 0.01% to $1.1965.

For the Pound

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

The lack of stats will leave the Pound in the hands of COVID-19 news on the day. Expect vaccination rates and infection rates to be the main areas of focus. A fall in infection rates amidst the ongoing vaccination drive would raise hope of an easing of containment measures.

At the time of writing, the Pound was up by 0.08% to $1.3683.

Across the Pond

It’s a busy day ahead on the economic calendar.

January’s nonfarm payroll figures and unemployment rate are due out later today.

With plenty of market sensitivity to U.S labor market numbers, expect today’s figures to garner plenty of interest.

Other stats on the day include average earnings and trade data. We would expect these numbers to have a muted impact on the markets, however.

At the time of writing, the Dollar Spot Index was down by 0.03% to 91.503.

For the Loonie

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

Key stats include trade data for December and employment figures for January. Expect January’s employment numbers to have the greatest impact on the Loonie.

Ivey PMI numbers for January are also due out late in the day and will likely garner some interest.

With no stats for the markets to have considered from earlier in the week, we can expect Loonie sensitivity to the numbers.

At the time of writing, the Loonie was up by 0.11% to C$1.2813 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.