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Stats Sink the Aussie as Focus Shifts to the EUR and the Pound

Particularly weak economic data weighed on the risk appetite early on, with a busy day of stats likely to test the markets further in the day.
Bob Mason
Light Board

Earlier in the Day:

It was a busy day on the economic calendar through the Asian session this morning.

Key stats were included 3rd quarter GDP numbers out of Japan and October employment numbers out of Australia. Out of China, industrial production figures also influenced risk appetite in the early part of the day.

Outside of the numbers, the markets also reacted to FED Chair Powell’s testimony to Congress late on Wednesday.

For the Japanese Yen

The economy grew by 0.1% in the 3rd quarter, quarter-on-quarter, falling short of a forecast of 0.2%. In the 2nd quarter, the economy had grown by 0.4%.

According to the cabinet office,

  • External demand fell by 0.2%, following a 0.3% decline in the 2nd quarter, with private consumption rising by just 0.4%. In the 2nd quarter, private consumption had risen by 0.6%.
  • Capital expenditure rose by 0.9%, however, picking up from a 0.7% increase in the 2nd
  • The exports of goods and services fell by 0.7%, following a 0.5% rise in the 2nd
  • Year-on-year, the economy grew by 0.2%, slowing from 1.8% in the 2nd Economists had forecast 0.8% growth.

The Japanese Yen moved from ¥108.801 to ¥108.778 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥108.78 against the U.S Dollar, while

For the Aussie Dollar

According to the ABS,

  • Employment decreased by 19,000 in October, reversing a 14,700 rise in September. Economists had forecasted a 15,000 rise.
  • There was a net decrease of 10,300in full-time employment and a net decrease of 8,700 in part-time employment.
  • Year-on-year, full-time employment increased by 135,700, while part-time employment increased by 116,100.
  • The unemployment rate rose from 5.2% to 5.3%, which was in line with forecasts.
  • Seasonally adjusted, the underemployment rate increased by 0.2 percentage points to 8.5%. The participation rate, however, fall by 0.1 percentage point (“pts”) to 66.0%
  • Whilst up by 0.2 pts year-on-year, the employment to population ratio fell by 0.2 pts to 62.5%, in October.

The Aussie Dollar moved from $0.68365 to $0.68048 upon release of the figures that preceded stats out of China. At the time of writing, the Aussie Dollar was down 0.54% to $0.6801.

Out of China

In October, industrial production rose by 4.7%, year-on-year, falling well short of a forecasted 5.4% increase. Industrial production had risen by 5.8% in September.

Fixed asset investments rose by 5.2%, year-on-year, also falling short of a forecasted 5.4% rise. In September, fixed asset investments had risen by 5.4%.

Adding to the doom and gloom were retail sales, which rose by 7.2%, year-on-year, coming up short of a forecasted 7.9% rise. In September, retail sales had risen by 7.8%.

Out of China, the only positive was a fall in the unemployment rate from 5.2% to 5.1%, which was of little consolation.

The Aussie Dollar moved from $0.68073 to $0.67978 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.25% to $0.6395.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats due out of the Eurozone include Germany’s 1st estimate GDP numbers for the 3rd quarter and the Eurozone’s 2nd estimate numbers.

Finalized October inflation figures are also due out of France and Spain that will likely have a muted impact on the EUR.

Expect Germany’s quarterly GDP number to have the greatest influence, with the German economy expected to contract in the 3rd quarter.

Outside of the numbers, Powell’s second day of testimony and any chatter on trade will also influence.

At the time of writing, the EUR was down by 0.04% to $1.1003.

For the Pound

It’s yet another busy day ahead on the data front. Key stats include October retail sales figures that will influence the Pound.

Disappointing numbers would fuel further speculation of a near-term BoE rate cut.

The Pound has stood up against quite dire data this week, supported by the general election opinion polls. It’s unlikely that the Pound would be able to stomach dire numbers today, however.

At the time of writing, the Pound was down by 0.05% to $1.2845.

Across the Pond

It’s a relatively quiet day on the economic calendar. Economic data out of the U.S include October wholesale inflation figures.

We can expect Dollar sensitivity to the numbers ahead of FED Chair Powell’s second day of testimony.

On the geopolitical front, updates on trade talks between the U.S and China will also influence on the day.

The Dollar Spot Index was down by 0.01% to 98.362 at the time of writing.

For the Loonie

It’s a relatively quiet day on the economic calendar. September house price figures are due out later today.

Barring particularly dire numbers, however, we would expect the numbers to have a muted impact on the Loonie.

Market risk appetite and OPEC’s monthly report will provide direction through the day.

Crude oil prices bounced back on Wednesday, supported by OPEC’s more positive outlook on supply and demand.

The Loonie was down by 0.04% to C$1.3256, against the U.S Dollar, at the time of writing.

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