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The Aussie Dollar Makes a Move as the Focus Shifts to the ECB and the EUR

Employment figures give the Aussie a boost as the focus shifts to the ECB. Will Lagarde follow the BoC with a dovish outlook to sink the EUR?
Bob Mason
Press Conference - Eurogroup finance ministers, Luxembourg

Earlier in the Day:

It was a busier day on the Asian economic calendar this morning. Key stats included trade data out of Japan and employment figures out of Australia.

For the Japanese Yen

Japan’s trade deficit widened from ¥85.2bn to ¥152.5bn in December. Economists had forecast a deficit of ¥150.0bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 6.3%, year-on-year, following a 7.9% slide in November. Economists had forecast a 4.2% decline.
    • Exports to China increased by 0.8% and by 2.3 to HK, while exports to Asia fell by 3.6%, weighed by a slide in exports to the broader region.
    • To Western Europe, exports fell by 7.5%, with exports to Germany (-4.6%), UK (-5.5%), and the Netherlands (-9.5%) weighing.
    • Exports to the U.S slid by 14.9%…
  • Imports fell by 4.9%, year-on-year, following a 15.7% tumble in November. Economists had forecast a 3.4% decline.
    • Imports from Asia fell by 4.5%, with imports from the U.S (-13.7%) and the EU (-1.5%) also declining.

The Japanese Yen moved from ¥109.763 to ¥109.719 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.09% to ¥109.74 against the U.S Dollar.

For the Aussie Dollar

Employment rose by 28.9K in December, following a 39.9K increase in November. Economists had forecast a 15.0k rise.

According to the ABS,

  • The total number of people in full-time employment fell by 300, while people in part-time employment rose by 29,200.
  • Since December 2018, full-time employment increased by 152,700 people, while part-time employment increased by 109,900 people.
  • The employment to population ratio held steady at 62.6% in December 2019 and was up by 0.3 pts since December 2018.

The Aussie Dollar moved from $0.68392 to $0.68754 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.48% to $0.6877.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.05% to $0.6596.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar, with the ECB in action later this afternoon.

On the economic data front, prelim Eurozone consumer confidence figures will also be in focus.

With the ECB expected to hold steady on monetary policy this month, the ECB press conference will likely have the greatest influence.

Following last month’s press conference, the big question is whether the review of the ECB framework is complete and if there is a shift in the ECB’s areas of focus in formulating policy decisions going forward.

We can expect any revisions to growth and inflation forecasts to also influence.

Will there be some optimism following December’s PMI numbers and the signing of the phase 1 trade agreement?

There is the threat of U.S tariffs on EU cars to consider. If Trump wants to make America great again, making it punitive to buy EU cars would make sense…

At the time of writing, the EUR was up by 0.03% to $1.1096.

For the Pound

It’s a particularly quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

With Brexit just days away, updates from the World Economic Forum could provide direction. How Boris Johnson progresses with world leaders on trade will be of market interest.

On the Brexit front, the House of Lords made changes to the Brexit Bill that Johnson had pushed through Parliament earlier in the month.

We will see another vote late on Wednesday to send the bill back to the House of Lords, which will likely kick start a game of ping pong until common ground is found.

All of this before Britain enters the transition period in just 5-days…

At the time of writing, the Pound was up by 0.05% to $1.3149.

Across the Pond

It’s another relatively quiet day on the data front, with stats limited to the weekly jobless claims figures.

Barring any jump in initial jobless claims to above 220k levels, we would expect the numbers to have a muted impact on the Dollar.

Outside of the numbers, expect updates on the coronavirus and the World Economic Forum to influence.

The Dollar Spot Index ended the day flat at 97.527 on Wednesday.

For the Loonie

It’s a quiet day ahead on the economic calendar, with no material stats due out of Canada to provide the Loonie with direction

Following the BoC’s policy decision from Wednesday, expect crude oil prices and the weekly inventory numbers to influence ahead of retail sales figures due out tomorrow.

Through the early part of the day, the markets responded further to the BoC’s dovish stance on policy.

The Loonie was down by 0.14% at C$1.3154 against the U.S Dollar, at the time of writing.

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