Stats, Brexit and Trade Talks Put the EUR, GBP and USD in Focus

Earlier in the Day:

It was a busier Asian session than usual this morning. Key stats released through the session included:

• NZ Building Consents (MoM) (Feb)
• Japan Jobs/applications ratio (Feb)
• Tokyo Core CPI (YoY) (Mar)
• Japan Industrial Production (MoM) (Feb) Prelim
• Japan Retail Sales (YoY) (Feb)
• Australia Private Sector Credit (MoM) (Feb)

Outside of the numbers, RBNZ Governor Orr spoke ahead of the morning’s stats.

For Kiwi Dollar,

Ahead of the Asian open, RBNZ Governor Orr reiterated the RBNZ’s bias towards a rate cut, which weighed on the Kiwi Dollar early.

The Kiwi Dollar moved from $0.67845 to $0.67754 during the speech that preceded the building consent figures.

Building consents rose by 1.9% in February, month-on-month. The increase came off the back of a revised 13.6% jump in January. According to NZStats:

• In the year ended February 2019, new dwellings consented increased by 9.7% from Feb-2018.

The Kiwi Dollar moved from $0.67756 to $0.67758 upon release of the figures. At the time of writing, the Kiwi Dollar stood at $0.6784, up 0.01% for the session.

For the Japanese Yen,

Job applications and March inflation figures were first up. The focus was on the inflation figures in the early part of the morning.

According to figures released by statistics Japan, the annual rate of core inflation held steady at 1.1% for Tokyo. In line with forecasts, inflation continued to fall well short of the BoJ’s target.

• Prices for fuel, light and water increased by 7.6% year-on-year.
• There were also notable increases in prices for furniture and household utensils (+2.4%) and medical care (+1.3%).
• Weighing on inflation were prices for housing (+0.5%), clothes and footwear (0.6%) and transportation and communication (-0.6%).
• Month-on-month, core consumer prices for the Ku-area fell by 0.1%.

Separately, the job/applications ratio held steady at 1.63, which was in line with forecasts.

The Japanese Yen moved from ¥110.637 to ¥110.634 upon release of the figures that preceded the industrial production and retail sales figures.

Industrial production increased by 1.4% in February, according to prelim figures, which was in line with forecasts.

According to figures released by the Ministry of Economy, Trade and Industry,

• Industries that contributed to the increase included:
  • Motor vehicles; Production machinery; and Electrical machinery and information and communication electronics equipment.
• Industries that dragged on the headline number included:
  • Transport equipment (excl. motor vehicles); Inorganic and organic chemicals; and Electronic parts and devices.

Retail sales increased by 0.4%, year-on-year, in February, falling short of a forecasted 0.9% rise. Sales in January rose by 0.6%. According to figures released by the Ministry of Economy, Trade and Industry, sales fell by 2.3% month-on-month.

The Japanese Yen moved from ¥110.65 to ¥110.651 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.14% to ¥110.79 against the U.S Dollar at the time of writing.

For the Aussie Dollar,

Private sector credit rose by 0.3% in February, following a 0.2% increase in January. Forecasts were for a 0.2% rise. According to figures released by RBA,

• Housing credit rose by 0.3%, month-on-month, picking up from a 0.2% increase in January.
• Personal credit fell by 0.1%, following on from a 0.7% slide in January.
• Business credit rose by 0.3%, which was at the same rate as in January.
• Year-on-year total credit rose by 4.2%, easing back from a 4.9% rise in January.
• Housing credit rose by 4.2%, down from a 6.2% rise in February 2018.
• Personal credit slid by 2.7%, following a 1.1% fall in February 2018.
• Business credit rose by 5.3%, picking up from a 3.4% rise in February 2018.

The Aussie Dollar moved from $0.70868 to $0.70862 upon release of the figures. At the time of writing, the Aussie Dollar was up 0.18% to $0.7087.

The Day Ahead:

For the EUR

It’s a busy day ahead for the EUR. Key stats out of the Eurozone include German retail sales and unemployment figures, French consumer spending and inflation numbers and 4^th quarter GDP figures out of Spain.

Later in the morning inflation figures out of Italy and the Eurozone will also provide direction for the EUR.

Following a string of disappointing stats and a dovish ECB, we can expect the EUR to be sensitive to the numbers.

Outside of the numbers, updates from the continuation of trade talks between the U.S and China and Brexit will also influence.

At the time of writing, the EUR was up 0.09% at $1.1254.

For the Pound

Economic data out of the UK include 4^th quarter GDP and business investment figures. Barring a material deviation from a forecasted 1.3%, we would expect the figures to have a muted impact on the Pound.

The main event of the day will be the UK Parliamentary vote on Theresa May’s Brexit deal. Well, part of the deal. Excluded from the original deal will be a vote on the UK’s future relationship with the EU.

MPs will be voting on citizens rights, the Irish backstop, and the divorce bill. On Thursday the DUPs had yet to show their support for the Irish backstop, suggesting that Theresa May would struggle to turn the 75 needed votes.

At the time of writing, the Pound was up 0.20% to $1.3070. While another vote against the British PM would weigh, hopes would then shift to next week’s votes on the alternatives.

Across the Pond

It’s another busy day ahead on the economic calendar. On the data front, the U.S session kicks off with the FED’s preferred inflation figures and personal spending numbers. With the markets now expecting the FED to cut rates later in the year, the Core PCE Price Index will need to be up by more than 2% to influence. Forecasts are for the annual rate of core inflation to hold steady at 1.9%.

An unexpected fall in personal spending could add pressure on riskier assets. Forecasts are for personal spending to rise by 0.3%, reversing a 0.5% fall in December.

Later on in the session, the Chicago PMI and consumer sentiment figures are also scheduled for release ahead of new home sales figures.

Outside of the data, FOMC members Williams, Kaplan, and Quarles are scheduled to speak. Any talk of a sooner rather than a later need for a rate cut would influence.

With the final day of U.S – China trade negotiations also there to consider, it’s a particularly busy day ahead.

At the time of writing, the Dollar Spot Index was down 0.01% to 97.196.

For the Loonie

January GDP and February’s RMPI numbers are due out later today. We can expect the Loonie to be more responsive to the GDP numbers that are forecasted to be Loonie positive.

Any upside may be short-lived, however, with market risk sentiment and crude oil prices to be the key driver on the day.

The Loonie was up 0.07% at C$1.3428, against the U.S Dollar, at the time of writing.