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Private Sector PMIs and Retail Sales Figures Put the EUR, GBP, USD and Loonie in Focus

It’s a busy day ahead, with private sector PMIs for January to set the tone. Expect retail sales figures from Canada to also drive the Loonie.
Bob Mason
worker with fork pallet truck

Earlier in the Day:

It was a busier day on the Asian economic calendar this morning. The Kiwi Dollar and Japanese Yen were in action.

Out of New Zealand, 4th quarter inflation figures were in focus, with private sector PMI and inflation figures out of Japan also providing direction.

Outside of the numbers, the coronavirus continued to garner plenty of attention. News of the virus spreading and the death toll rising was negative for the majors early this morning. The good news, however, was that the WHO held back from declaring a global public health emergency over the coronavirus outbreak.

Thursday’s ECB press conference was also a market negative as ECB President Lagarde talked down the Eurozone economy,

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For the Kiwi Dollar

The annual rate of inflation accelerated from 1.5% to 1.9% in the 4th quarter, coming in ahead of a forecast of 1.8%. Quarter-on-quarter, consumer prices rose by 0.5% in the 4th quarter, following a 0.7% rise in the 3rd quarter. Economists had forecast a 0.4% rise.

According to NZ Stats,

  • Rising prices for airfares, rents and petrol led to the pickup in inflationary pressures.
  • Transport costs rose by 2.1% in the 4th quarter. The cost of international airfares increased by 9.3%.
  • Prices for accommodation services rose by 4.4%, with petrol prices up by 1.6%.
  • Rent prices increased by 0.8% in the 4th quarter and surged by 3.1% for the year.
  • Vegetable prices slid by 13% in the quarter, however.

The Kiwi Dollar moved from $0.66060 to $0.66159 upon release of the figures. At the time of writing, the Kiwi Dollar was flat at $0.6617.

For the Japanese Yen

The annual rate of core inflation picked up from 0.5% to 0.7% in December, according to figures released by the Ministry of Internal Affairs and Communication. Economists had forecast an annual rate of core inflation of 0.7%.

The Japanese Yen moved from ¥109.528 to ¥109.552 upon release of the figures, which preceded the prelim PMI numbers.

Japan’s manufacturing PMI increased from 48.4 to 49.3 in January, with Japan’s services PMI jumping from 49.4 to 52.1, according to prelim figures.

According to the January Markit Survey,

  • For the services sector, output expanded at the quickest pace in 4-months, supported by stronger increases in new business and employment.
  • Output charges moved into inflation territory.
  • For the manufacturing sector, the rate of contraction was the slowest since August and only modest.
  • New export orders increased in January, following a decline in December, while new orders declined at a softer pace.
  • The pace of hiring picked up in January, with factory gate prices rising after having fallen in December.
  • Input prices saw weaker inflation, however.

The Japanese Yen moved from ¥109.541 to ¥109.559 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.04% to ¥109.53 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was flat at $0.6847.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include prelim January private sector PMI numbers out of France, Germany, and the Eurozone.

We can expect the numbers to garner plenty of attention, with the markets expecting improved private sector conditions.

On the monetary policy front, ECB President Lagarde is also scheduled to speak, though there are unlikely to be too many surprises following Thursday’s press conference.

At the time of writing, the EUR was down by 0.02% to $1.1053.

For the Pound

It’s a relatively busy day ahead on the economic calendar. January prelim private sector PMI numbers are due out later today.

While the manufacturing numbers will influence, expect the services PMI to have the greatest impact. The devil may well be in the details, however, with new orders and employment likely to be the main areas of focus.

On the geopolitical front, Brexit will also be in focus as Britain prepares to enter the transition period at the end of next week.

The big news of the week was the passing of the Brexit Bill through the House of Lords, with the Queen approving the Bill.

At the time of writing, the Pound was down by 0.06% to $1.3115.

Across the Pond

It’s another relatively busy day on the data front, with January’s prelim private sector PMI numbers in focus.

While the manufacturing PMI will need to hold steady, the services PMI will have the greatest influence on the day.

Outside of the numbers, expect updates on the coronavirus and the World Economic Forum to continue to influence.

The Dollar Spot Index was up by 0.02% to 97.713 at the time of writing.

For the Loonie

It’s a relatively busy day ahead on the economic calendar, with November retail sales figures due out of Canada.

We can expect the Loonie to be particularly responsive to the numbers, which are forecasted to be Dollar positive.

Following Wednesday’s BoC policy decision, the numbers will need to impress to ease the probability of a near-term rate cut.

The Loonie was down by 0.02% at C$1.3129 against the U.S Dollar, at the time of writing.

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