Pre-Thanksgiving Economic Data Puts the Greenback and the U.S Economy in the Spotlight

Earlier in the Day:

It was busier start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in focus in the early hours, with the RBNZ also in action.

For the Aussie Dollar

In the 3^rd quarter, construction work down slipped by 0.3% quarter-on-quarter, following a 0.8% increase in the quarter prior. Economists had forecast a 3.1% slide.

The Aussie Dollar moved from $0.72213 to $0.72237 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.11% to $0.7220.

For the Japanese Yen

Prelim private sector PMIs were in focus this morning.

In November, the services PMI rose from 50.7 to 52.1, while the manufacturing PMI increased from 53.2 to 54.2.

According to the prelim survey,

• Output growth was the most marked since Oct-2018, with both sectors contributing.
• New export orders returned to growth, with new orders seeing stronger growth in the month.
• Backlogs of work returned to growth across the private sector, while the pace of hiring slowed.
• Price pressures intensified, however, with input prices rising at the fastest pace in over 13-years.
• In spite of stronger input price inflation, output price inflation softened in November.
• Firms were optimistic, however, supported by rising vaccination rates and the easing of restrictions.

The Japanese Yen moved from ¥115.163 to ¥115.121 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.03% to ¥115.180 against the U.S Dollar.

For the Kiwi Dollar

The RBNZ increased the cash rate by 25 bps to 0.75%, which was in line with expectations, placing the focus on the RBNZ statement and press conference.

Salient points from the rate statement included:

• The Committee agreed that it remains appropriate to continue reducing monetary policy so as to maintain price stability and support maximum sustainable employment.
• Accommodative monetary and fiscal policy continue to support a rise in global economic activity.
• Elevated uncertainty created by the persistent COVID-19 virus has checked the pace of the recovery, however.
• Global supply-chain disruptions are causing both cost pressures and constraints on production.
• Central banks globally face the challenge of distinguishing transitory price increases and underlying sustained inflation pressures to assess the need for, and timing of, reductions in the level of monetary policy stimulus.
• The RBNZ expects household spending and business investment to be dampened near-term as a result of a likely rise in COVID-19 cases stemming from the easing of restrictions.
• Despite restrictions in certain parts of NZ, underlying economic strength remains supported by aggregate household and business balance sheet strength. These are supported by fiscal support and strong export returns.
• Capacity pressures have continued to tighten.
• A broad range of economic indicators highlight that the NZ economy continues to perform above its current potential.
• Headline inflation is expected to measure above 5% near-term before returning towards the 2% mid-point over the next 2-years.
• The Committee noted that further removal of monetary policy stimulus is expected over time given the medium-term outlook for inflation and employment.

The Kiwi Dollar moved from $0.69389 to $0.69305 upon the decision and in response to the statement. At the time of writing, the Kiwi Dollar was down by 0.30% to $0.6928, with the RBNZ press conference up next.

The Day Ahead

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany’s Ifo Business Climate Index and sub-components will be in focus later this morning.

The markets will be looking for any concerns over the recent pickup in new COVID-19 cases. Weaker sentiment would test EUR support.

At the time of writing, the EUR was down by 0.05% to $1.1242.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Economic data is limited to CBI industrial trend orders.

With little else to consider, expect the numbers to influence.

On the monetary policy front, MPC member Tenreyro will also draw interest later in the day.

At the time of writing, the Pound was down by 0.02% to $1.3375.

Across the Pond

It’s a particularly busy day ahead on the economic calendar, with the U.S markets closed for Thanksgiving on Thursday.

Key stats include 3^rd quarter GDP, personal spending, inflation, jobless claims, and core durable goods orders.

Other stats include trade data, finalized consumer sentiment, and housing sector data that should have a muted impact on the Dollar.

On the monetary policy front, the FOMC meeting minutes will also garner plenty of attention late in the day. Expect the focus to be on FOMC member sentiment towards inflation and the economic outlook

At the time of writing, the U.S Dollar Spot Index was up by 0.04% to 96.531.

For the Loonie

It’s a particularly quiet day ahead, with no major stats to consider.

The lack of stats will leave the Loonie in the hands of economic data from the U.S and crude oil inventories.

At the time of writing, the Loonie was down by 0.06% to C$1.2678 against the U.S Dollar.

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