Retail Sales and Brexit Keep the Pound Front and Center

Earlier in the Day:

Economic data released through the Asian session this morning included January’s business PMI numbers out of New Zealand, January inflation figures out of China and finalized December industrial production numbers out of Japan.

For the Kiwi Dollar,

The Business PMI slipped from 55.1 to 53.1 in January, according to figures released by Business NZ.

Looking at the PMI’s components

• The New Orders sub-index slid from 55.2 to 52.2. The production index also took a hit, falling from 54.9 to 51.1.
• Also weighing on the headline number were the finished stocks sub-index, which fell from 59 to 54.8 and deliveries, which fell from 58.6 to 53.8.
• Only the employment sub-index held steady at 52.2 in February.

In spite of the decline, the PMI sits just shy of the long-run average of 53.4, though there will need to be more progress on trade talks between the U.S and China for the sector to avoid further declines.

The Kiwi Dollar moved from $0.68332 to $0.6831 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.16% to $0.6826

Out of China,

According to figures released by the National Bureau of Statistics, the annual rate of inflation softened from 1.9% to 1.7% in January. Forecasts were for the rate of inflation to hold at 1.9%. Month-on-month, consumer prices rose by 0.5%, which was in line with forecasts. The softer inflation figures were attributed to a decline in food prices.

Wholesale inflation was of greater concern. Wholesale prices rose by just 0.1%, year-on-year, coming in below a forecasted 0.3% rise and December’s 0.9% increase.

The Aussie Dollar moved from $0.70946 to $0.70839 upon release of the figures. At the time of writing, the Aussie Dollar stood at $0.7090, down by 0.23% for the session.

For the Japanese Yen,

Industrial production fell by 0.1% in December according to the Ministry of Economy, Trade, and Industry. Which was in line with prelim figures. In November, industrial production had fallen by 1%.

Upon release of the figures, the Japanese Yen moved from ¥110.310 to ¥110.296, against the Dollar. At the time of writing, the Yen stood at ¥110.34, up 0.13% for the session.

The Day Ahead:

For the EUR

Economic data scheduled for release includes finalized January inflation figures out of Spain and December trade data for the Eurozone.

Barring a material deviation from prelim figures, the greatest influence will likely come from today’s trade data, which could be EUR positive if Germany’s trade figures are anything to go by.

Following weaker than expected GDP numbers out of Germany for the 4^th quarter, any upside in the EUR may be capped, however, as economic indicators continue to raise red flags.

Outside of the numbers, updates from trade talks between the U.S and China will continue to influence risk appetite and the EUR through the day.

At the time of writing, the EUR down by 0.09% at $1.1285.

For the Pound

Economic data scheduled for release includes January retail sales figures. While forecasts are for a rise in sales, the numbers would need to be on the higher side to make a dent into December’s slump and give the Pound some much-needed support.

Outside the numbers, we can expect Brexit chatter to continue to impact following Theresa May’s latest loss in Parliament.

At the time of writing, the Pound was down by 0.03% at $1.2799.

Across the Pond

Stats scheduled for release are on the heavier side through the day. The focus will be on January’s retail sales and prelim consumer sentiment figures. Early support for the Dollar could come from February manufacturing numbers out of NY Stats, headline number needing to be in line with or better than forecast.

Outside of the numbers, we can expect updates from trade talks to influence market risk sentiment. From the Oval Office a bill, passed by Congress overnight, is awaiting Trump’s signature to avert another government shutdown.

At the time of writing, the Dollar Spot Index was down by 0.09% to 97.067.

For the Loonie

There are no material stats scheduled for release through the day, leaving the Loonie in the hands of market risk sentiment and the influence of U.S – China trade talks on crude oil prices.

The Loonie was down by 0.08% to C$1.3306, against the U.S Dollar, at the time of writing.