Reality Bites as Powell Douses the Flames of Optimism. Next up, Initial Jobless Claims…

Earlier in the Day:

It was another relatively busy start to the day on the economic calendar this morning. The British Pound, Japanese Yen, and Kiwi Dollar were in action in the early part of the day.

While the markets considered this morning’s stats, however, the key drivers were the overnight FOMC projections, rate statement, and press conference.

Looking at the latest coronavirus numbers, there were no major spikes to alarm the markets.

On Wednesday, the number of new coronavirus cases rose by 128,469 to 7,445,289. On Tuesday, the number of new cases had risen by 128,377. The daily increase was higher than Tuesday’s rise and 121,534 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 866 new cases on Wednesday, which was up from 843 new cases on Tuesday. On the previous Wednesday, 1,049 new cases had been reported.

From the U.S, the total number of cases rose by 20,674 to 2,066,223 on Wednesday. On Tuesday, the total number of cases had risen by 19,894. On Wednesday, 3^rd June, a total of 21,763 new cases had been reported.

For the Kiwi Dollar

In May, electronic card retail sales surged by 78.9%, month-on-month, reversing a 46.8% slump in April.

According to NZ Stats,

• Retail card spending jumped by NZ$2.3bn in May as businesses reopened following the level 4 lockdown.
• While spending was up in the month, it was down by NZ$332m, in actual terms, from May 2019.
• Only two of the six industries had increased spending compared with May 2019.
• Grocery and liquor had the largest increase, rising by NZ$254m (12%), with spending on furniture, hardware, appliances, and other durables rising by NZ$122m (9.3%).
• Spending on eating out, and hotels, motels, and other accommodation had the largest fall, down NZ$428m (41%).
• Fuel sales also saw red, falling NZ$210m (35%).

The Kiwi Dollar moved from $0.65281 to $0.65262 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.12% to $0.6528, with the jump in spending expected in May.

For the Japanese Yen

The BSI Large Manufacturing Conditions Index tumbled from -17.2 to -52.3 in the 2^nd quarter. In the 1^st quarter, the index had fallen from -7.8 to -17.2.

The Japanese Yen moved from ¥106.999 to ¥107.005 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.18% to ¥106.93 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.34% to $0.6974.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. French non-farm payrolls for the 1^st quarter are due out.

While France had yet to enter a full lockdown, economic strife had already been evident and reflected in the 1^st quarter GDP numbers.

The markets will be prepped and ready for a further decline from the 4^th quarter. We shouldn’t see too much influence on the EUR, with 2^nd quarter numbers likely to be even more reflective of the impact of COVID-19 on the economy.

Away from the economic calendar, the markets will be looking for any updates on the coronavirus bailout plan.

At the time of writing, the EUR was up by 0.14% to $1.1388.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction later today.

Earlier this morning, RICS House Price Balance for May had little impact as house prices continued to decline in the UK. The RICS House Price Balance fell from -22% to -32%. Economists had forecast a fall to -24%.

On the geopolitical risk front, Brexit will remain center stage. Expect any chatter from the EU and from the UK to influence. Time is running out and both sides have dug their heels in.

If the news wires are anything to go by, EU chief negotiator Barnier is getting a little hot under the collar.

At the time of writing, the Pound was down by 0.12% to $1.2732.

Across the Pond

It’s another busy day ahead on the U.S economic calendar. Wholesale inflation figures for May and the weekly jobless claims figures are due out later today.

While another slide in wholesale prices would raise more red flags, the jobless claims figures will be the key driver.

Riskier assets got a boost last Friday, following better than expected nonfarm payroll figures. Another surge in jobless claims may make a large dent in the theory that a labor market recovery is afoot…

As always, the markets will also need to keep an eye on Beijing and Capitol Hill as geopolitical risks linger.

The Dollar Spot Index was up by 0.02% to 95.980 at the time of writing.

For the Loonie

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

That will leave the Loonie in the hands of market risk appetite and further reaction to Wednesday’s FOMC… We may even see Trump’s Twitter account get a little more active…

At the time of writing, the Loonie was down by 0.11% to C$1.3427 against the U.S Dollar.

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