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Bob Mason
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Earlier in the Day:

It was a relatively busy day on the Asian economic calendar this morning. The Kiwi Dollar, the Japanese Yen, and Aussie Dollar, by proxy, were in action in the early part of the day.

Out of New Zealand, 4th quarter employment figures provided direction, with service sector PMI numbers out of China and Japan also in focus.

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For the Kiwi Dollar

Employment held steady in the 4th quarter, following a 0.2% rise in the 3rd quarter. Economists had forecast a 0.3% increase. While there was no increase in employment, the unemployment rate fell from a revised 4.1% to 4.0% in the quarter. Economists had forecast the unemployment rate to hold steady in the quarter.

According to NZ Stats,

  • The underutilization rate fell from 10.4% to 10.0% in the 4th quarter, which was the lowest rate since the 2nd quarter of 2008.
  • While the unemployment rate fell, the employment rate fell from 67.5% to 67.3% in the quarter.
  • People not in the labor force increased. In the quarter the number of people not in the labor force increased by 18,000 to reach 1,177,000. This was the highest number since the series began in 1986.
  • Wage growth impressed, however, with a 2.6% rise in the year to the December 2019 quarter. This was the largest increase since the 2nd quarter of 2009 when wages increased by 2.8%.

The Kiwi Dollar moved from $0.64902 to $0.64890 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.11% to $0.6483.

For the Japanese Yen

The finalized January Service PMI came in at 51.0, which was up from December’s 49.4, while down from a prelim 52.1.

According to the finalized survey,

  • Business activity grew at the fastest pace in 4-months.
  • There were solid gains in new work, which drove growth at the start of the year.
  • Employment was also on the rise, with the rate of hiring hitting an 8-month high.
  • The pickup in hiring led to a fall in backlogs, which was the first since Nov-18.
  • Optimism slumped to a 29-month low, however. Concerns towards the aging population and weak economic conditions weighed.

The Japanese Yen moved from ¥109.39 to ¥109.405 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥109.48 against the U.S Dollar.

Out of China

The Caixin Services PMI fell from 52.5 to 51.8 in January. Economists had forecast a rise to 52.6.

According to the January Survey,

  • Business activity growth slowed for a 2nd consecutive month.
  • Total new orders expanded at a slower pace in spite of a pickup in new work from abroad.
  • After 15-months of hiring, workforce numbers held steady in January. Efforts to reduce operating costs pinned back the pace of hiring.
  • Optimism improved at the turn of the year, with positive forecasts leading to a 16-month high.

The Aussie Dollar moved from $0.67326 to $0.67435 upon release of the data. At the time of writing, the Aussie Dollar was flat at $0.6739.

Elsewhere

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats due out of the Eurozone include service sector PMI numbers out of Italy and Spain. Finalized PMIs are also due out of France, Germany, and the Eurozone along with Eurozone retail sales figures.

Barring revision to prelim numbers, the focus will likely be on the Eurozone composite and the Eurozone’s retail sales numbers.

At the time of writing, the EUR was down by 0.09% to $1.1034.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. The UK’s finalized services PMI for January is due out later today.

Any upward revisions would provide further support to the Pound.

Outside of the numbers, expect the Pound to continue to face strong resistance over Brexit.

At the time of writing, the Pound was down by 0.12% to $1.3015.

Across the Pond

It’s a relatively busy day ahead on the data front.

Key stats due out of the U.S include the market’s preferred ISM Non-Manufacturing PMI numbers for January and finalized Markit Service PMI figures.

The ADP’s nonfarm employment change numbers will also provide direction in the earlier part of the U.S session.

We would expect the ISM numbers to have the greatest impact on the day, however.

Outside of the numbers, expect Trump’s State of the Union Address to influence.

At the time of writing, the Dollar Spot Index was up by 0.06% to 98.014, as Trump delivers the State of the Union Address to Congress.

For the Loonie

It’s a relatively quiet day ahead on the economic calendar. December trade data is due out of Canada later today.

After a quiet start to the week, we can expect the Loonie to be particularly sensitive to today’s numbers. The BoC has left the door ajar for a near-term rate cut.

Disappointing numbers would add further pressure on the Loonie as oil prices struggle.

The Loonie was down by 0.11% at C$1.3292 against the U.S Dollar, at the time of writing.

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