Stats Put the EUR in Focus, as Sentiment towards a Trade Deal Wanes

Economic data puts the EUR in focus, with trade talks and UK politics also of influence on the majors.
Bob Mason
Global financial markets

Earlier in the Day:

It was another relatively quiet day on the economic calendar through the Asian session this morning.

Key stats were included October business confidence figures out of Australia and 4th quarter inflation expectation numbers out of New Zealand.

Outside of the numbers, the markets reacted further to news from Monday of Trump denying having agreed to the rollback of tariffs.

For the Aussie Dollar

The NAB Business Confidence Index rose from 0 to 2 in October, falling well short of the long-run average of +6 points.

According to the October survey,

  • Mining, construction, retail and finance, business & property services saw confidence levels sit at around 3 points. Other industries saw conditions deteriorate in the month, with confidence in retail and wholesale the weakest.
  • The Business Conditions Index rose by 2 points to +3 points.
  • Looking at the sub-categories:
    • The employment index held steady at 4 points, supporting healthy employment growth near-term.
    • Trading conditions improved, with the sub-index rising by 3 points to +7.
    • Sentiment towards profitability also improved, with the sub-index rising by 2 points to 0.
    • The forward order sub-index rose by 5 points to +3 points, with the exports sub-index up by 1 point to +1.

The Aussie Dollar moved from $0.68487 to $0.68518 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.22% to $0.6836.

For the Kiwi Dollar

Inflation expectations for 2-years out eased further in the 4th quarter, falling from 1.86% to 1.80%. Inflation expectations had stood at 2.01% back in early May.

According to the RBNZ’s survey of expectations,

  • Inflation expectations for 1-year out fell from 1.71% in the 3rd quarter to 1.66% in the 4th

The Kiwi Dollar moved from $0.63564 to $0.63418 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.22% to $0.63446.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.08% to ¥109.14 against the U.S Dollar, while

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats due out of the Eurozone include the ZEW’s November economic sentiment and current conditions figures for Germany and the Eurozone.

With the ECB reliant upon consumer spending to prop up the economy, we can expect plenty of sensitivity to day’s figures.

Outside of the numbers, expect geopolitical risk to continue to influence.

At the time of writing, the EUR was down by 0.04% to $1.1029.

For the Pound

It’s another busy day ahead on the data front. Key stats include employment figures that will provide the Pound with direction.

While a forecasted fall in the unemployment rate would be positive, the market focus will likely be on the claimant count and wage growth figures.

Claimants are forecasted to rise by 26.5k in October, following a 21.1k rise in September. Wages are expected to rise by 4% in September, up from 3.8% in August.

On the geopolitical risk front, UK politics will continue to grip the Pound. According to the YouGov poll of polls, the Conservatives have 39% of the vote, well ahead of the Opposition Party’s 26%.

The Pound got a boost on Monday in response to Farage’s decision to not compete for 317 Conservative Party seats. While the Brexit Party is not projected to win any seats, the latest news led to a rise in projected seats for the Tories.

In response to Farage’s comments, the Electoral Calculus, which estimates the number of seats each party would win, raised its projection for the Tory Party from 370 to 382. That would give Johnson a majority of 114.

At the time of writing, the Pound was up by 0.02% to $1.2857.

Across the Pond

It’s another quiet quiet day on the economic calendar. There are no material stats due out of the U.S to provide the Greenback with direction.

While there are no stats, U.S President Trump is due to speak at the Economic Club of New York that will provide the Dollar and the broader markets. We can expect plenty of chatter on trade and quite possibly views on monetary policy…

The Dollar Spot Index was up by 0.06% to 98.256 at the time of writing.

For the Loonie

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

Market risk appetite and influence on crude oil prices will provide direction throughout the day.

The Loonie was down by 0.10% to C$1.3246, against the U.S Dollar, at the time of writing.

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