Risk Appetite Returns, with Factory Orders to Direct the EURA quiet day on the economic calendar leaves the EUR exposed to factory order numbers out of Germany and the USD in Trump’s hands.
Earlier in the Day:
It was a particularly quiet start to the week, with no material stats released through the Asian session, leaving the markets to consider the week ahead, with the RBA and RBNZ due to deliver interest rate decisions and guidance on policy.
Disappointing nonfarm payroll and service sector PMI numbers provided some support to the Aussie Dollar and Kiwi Dollar early on, with the Kiwi Dollar up 0.10% to $0.6751, while the Aussie Dollar was flat at $0.7404.
Both may come under pressure later in the day however, with the markets likely to consider the respective central banks to maintain relatively dovish stances on policy, neither expected to be looking to lift rates at any time this year, the RBNZ having also suggested a possible need for further easing.
For the Japanese Yen, a pickup in risk appetite through the early part of the day saw the Yen fall by 0.09% to ¥111.35 at the time of writing, with the Dollar finding some early support.
In the equity markets, the majors tracked the U.S markets from Friday into positive territory, the Hang Seng leading the way early on, rising by 1.29%, with both the CSI300 and ASX200 up 0.73% at the time of writing, while the Nikkei was up 0.33% through the early part of the day.
The Day Ahead:
For the EUR, it’s particularly quiet week ahead, with key stats scheduled for release this morning being limited to June factory order numbers out of Germany that are forecasted to be EUR negative.
Softer manufacturing PMI numbers released last week and a pullback in factory orders at the end of the 2nd quarter would certainly be of concern.
At the time of writing, the EUR was down 0.07% to $1.1561, with today’s factor order numbers expected to weigh.
For the Pound, there are no material stats scheduled for release to provide direction for the Pound, with the markets having to look ahead to NIESR GDP estimate numbers on Thursday and 2nd quarter GDP and manufacturing production figures on Friday for direction.
Carney’s Thursday press conference and sentiment towards Brexit continue to be negatives for the Pound at the start of the week, with this week’s stats needing to impress to stop the Pound from taking a bigger hit, Brexit negotiations not scheduled to resume until next week.
At the time of writing, the Pound was down 0.05% to $1.2995.
Across the Pond, there are no material stats scheduled for release through the day, leaving the Dollar in the hands of Trump and chatter on trade, North Korea and possibly Iran as sanctions become effective today.
Following a pullback in the Dollar on Friday, the Dollar should find some support, the weaker nonfarm payroll numbers coming off the back of a solid June figure, with a marked slowdown in the pace of growth in the services sector likely to be accepted by the markets as a one off, the stats unlikely to materially influence the FED’s outlook on policy or the U.S economy.
At the time of writing, the Dollar Spot Index was up 0.06% to 95.219.
For the Loonie, it’s a public holiday in Canada that will see volumes on the lighter side and, with no material stats scheduled for release, moves will likely come from any chatter on NAFTA.
At the time of writing, the Loonie was down 0.03% to C$1.2995 against the U.S Dollar, with the markets needing to wait until tomorrow’s July Ivey PMI numbers direction, any progress on NAFTA and further positive stats in the week ahead supportive of a more hawkish BoC and a near-term rate hike.