Private Sector PMIs and US ADP Nonfarm Figures Put the EUR and the Dollar in the Spotlight

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning. The Kiwi Dollar, Aussie Dollar, and Japanese Yen were all in action, with economic data from China also in focus.

For the Kiwi Dollar

Employment figures for the 4^th quarter supported the Kiwi Dollar.

Employment rose by 0.60% in the quarter, partially reversing a 0.8% decline in the 3^rd quarter. As a result, the unemployment rate fell from 5.3% to 4.9%. Economists had forecast a fall in employment of 0.8% and an unemployment rate of 5.6%.

According to NZ Stats,

• Despite the 4^th quarter rise in employment, the unemployment rate remained higher than it has been in a few years.
• This time last year, the unemployment rate had stood at 4.1%.
• The total number of unemployed remained 25,000 higher than the 4^th quarter of last year.

The Kiwi Dollar moved from $0.71645 to $0.71912 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.29% to $0.7213.

For the Aussie Dollar

Building approvals jumped by 10.9% in December, following a 2.6% increase in November.

According to the ABS,

• A 6^th consecutive monthly increase in approvals took private sector house approvals to a record high in December.
• Private sector house approvals surged by 15.8%, while dwellings excluding houses increased by 2.3%.

The Aussie Dollar moved from $0.76079 to $0.76113 upon release of the data that preceded service PMI numbers from China. At the time of writing, the Au1ssie Dollar was up by 0.12% to $0.7616.

For the Japanese Yen

Japan’s Services PMI fell from 47.7 to 46.1 in January, which was a upward revision from a prelim 45.7.

According to the finalized Survey,

• Rising COVID-19 cases continued to weigh on service sector activity at the start of the year.
• Both output and new business inflows saw sharper declines in January.
• New business inflows fell at the fastest pace in 8-months.
• Employment levels remained stable for a fourth consecutive month, however.
• Firms also remained optimistic towards growth prospects.

The Japanese Yen moved from ¥105.021 to ¥105.032 upon release of the finalized PMI. At the time of writing, the Japanese Yen was up by 0.04% to ¥104.94 against the U.S Dollar.

Out of China

China’s Caixin Services PMI fell from 56.3 to 52.0 in January.

According to the January Caixin survey,

• Business activity saw its weakest increase in 9-months in January.
• New business increased at the slowest pace since last August, with new export sales weighing.
• Weak demand, attributed to the COVID-19 pandemic, weighed on export sales at the start of the year.
• In spite of weaker conditions, staffing levels increased marginally.
• Input cost inflation increased to the second-sharpest pace since early 2012.
• Optimism towards the next 12-months remained strong, while weakening from December to the lowest level since last September.

The Aussie Dollar moved from $0.76100 to $0.76160 upon release of the figures.

The Day Ahead:

For the EUR

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

Italian and Spanish service sector PMI figures for January are due out.

Finalized numbers are also due out, along with composite PMIs, for France, Germany, and the Eurozone.

Barring any marked revisions from prelims, expect Italy and the Eurozone’s PMIs to be the key drivers.

Later in the day, prelim January inflation figures for Italy and the Eurozone will also draw attention.

Expect the Eurozone’s annual rate of inflation to have the greatest impact on the EUR.

Away from the economic calendar, expect COVID-19 news updates to also continue to influence.

At the time of writing, the EUR was up by 0.03% to $1.2048.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. January’s finalized services and composite PMIs are due out later this morning.

Expect any marked downward revisions to prelim figures to pin back the Pound.

At the time of writing, the Pound was up by 0.08% to $1.3679.

Across the Pond

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

ADP nonfarm employment change figures are due out along with the market’s preferred ISM Non-Manufacturing PMI for January.

Expect both sets of numbers to provide the Dollar with direction.

Finalized Markit survey PMI numbers are also due out but should have a muted impact on the markets.

Away from the economic calendar, chatter from Capitol Hill will remain a key area of interest.

At the time of writing, the Dollar Spot Index was down by 0.19% to 91.028.

For the Loonie

It’s another particularly quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of the weekly EIA and API crude oil inventory numbers.

At the time of writing, the Loonie was up by 0.11% to C$1.2767 against the U.S Dollar.

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