Powell and the North Korea – U.S Summit Keep the USD in Focus

Earlier in the Day:

Economic data released through the Asian session was on the lighter side this morning. Key stats included January trade data out of New Zealand. Later in the morning, 4^th quarter construction work done figures were released out of Australia.

For the Kiwi Dollar,

The trade deficit widened from NZ$5,860m to NZ$6,360m in January, year-on-year. Forecasts were for a narrowing of the deficit to NZS5,496m According to figures released by NZ Stats:

• For the month of January, the trade surplus fell from a revised NZ$12m to an NZ$914m deficit.
• While both imports and exports were up compared with January 2018, imports rose at a greater pace.
• In January 2019, exports rose by NZ$379m (7.7%) from January 2018 to reach NZ$5.3bn. Exports rose by NZ$128m (3.0%) to reach NZ$4.4bn.
• The increase in imports was attributed to a rise in the import of commodities. Petroleum and product imports rose by NZ$81m to lead the way.
• The rise in exports came from an NZ$167m increase in the exports of milk powder, butter, and

The Kiwi Dollar moved from $0.68917 to $0.68862 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.07% to $0.6893.

For the Aussie Dollar,

According to figures released by the ABS, 4^th quarter construction work done tumbled by 3.1%, quarter-on-quarter. Forecasts were for a 0.6% rise following a 3^rd quarter 2.8% fall.

• Engineering work done fell by 5%, with residential work done down by 3.6% for the quarter.
• Also on the slide was building work done, which fell by 1.7%.
• Offsetting some of the downside was a 1.9% rise in non-residential work done.
• Compared with the 4^th quarter of 2017, construction work done was down by 2.6%. A 7.8% slide in engineering work done weighed.

The Aussie Dollar moved from $0.71936 to $0.71875 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.7186.

Elsewhere,

At the time of writing, the Japanese Yen was flat at ¥110.59, against the U.S Dollar. A pickup in risk appetite through the session pegged back the Yen on the day while providing support for the Kiwi Dollar and Aussie Dollar.

The Day Ahead:

For the EUR

February business confidence figures are scheduled for release out of the Eurozone. With economic indicators out of the Eurozone flashing red, the EUR could come under pressure should the numbers be in line with or worse than forecast.

Outside the numbers,

The Bundesbank’s Weidmann will speak later this morning. As a member of the ECB, any dovish chatter will weigh on the EUR. The EUR may see little downside, however, as few expect any hawkish chatter from the ECB for now.

At the time of writing, the EUR down 0.11% at $1.1377.

For the Pound

Through the day,  no material stats scheduled for release. The lack of stats has become a support mechanism for the Pound, which has been on the rise on hopes of a no-deal departure being averted.

For the British PM, Theresa May assured members of parliament that a vote on delaying Brexit or in favor of ruling out a no-deal departure would be on the table. The assurance came as the threat of more “Remainers” departing for the Independent group threatened any chance of the 12^th March meaningful vote getting through.

Interestingly, the British PM added that any deadline could only extend to June and would need to be a one-off. So, as things stand, a lack of support for the deal on 12^th March would lead to a 14^th March vote on delaying Brexit. In the event of parliament votes against a delay, Britain would then fall out of the EU without a deal. If the vote comes in favor of an extension, the British PM would then need to obtain the backing of all 27 member states.

There’s certainly some choppy days ahead.

At the time of writing, the Pound was down by 0.08% at $1.3242.

Across the Pond

Economic data scheduled for release includes December factory order numbers and January pending home sales.

In spite of a string of disappointing stats out of the manufacturing sector, factory orders are forecasted to rebound in December. In contrast, pending home sales are forecasted to slide once more, which may pin back the Dollar later in the day.

Outside of the numbers, FED Chair Powell gives his second day of testimony to lawmakers. Despite a jump in consumer confidence, the Dollar was under pressure on Tuesday. Weak housing sector data and a dovish FED Chair did the damage.

Gains the early part of this morning come ahead of the U.S – North Korean Summit in Vietnam. While Trump will be looking to deliver progress on denuclearization, friction on Capitol Hill continues and needs to be monitored.

At the time of writing, the Dollar Spot Index was up by 0.13% to 96.129.

For the Loonie

After a quiet start to the week, economic data scheduled for release includes January inflation figures. We can expect the Loonie to be particularly sensitive to the numbers later today.

Outside of the numbers, risk sentiment and today’s weekly EIA crude oil inventory numbers will also provide direction.

The Loonie was flat at C$1.3169, against the U.S Dollar, at the time of writing.