The Aussie Dollar Takes an early Swim as Focus Shifts to the GBP

Earlier in the Day:

It was another relatively busy day on the economic calendar through the Asian session this morning. Key stats included August electronic card retail sales figures out of New Zealand and August business confidence figures out of Australia.

August inflation figures out of China also influenced in the early part of the day.

For the Kiwi Dollar

Electronic card sales rose by 1.1% in August, month-on-month, following a 0.1% fall in July. It was the largest increase in spending since a 1.8% rise in January.

According to NZ Stats,

• Spending increased in 5 of the 6 retail industries, month-on-month.
• The largest increases in spending were:
  • Durables, including hardware, furniture, and appliances (+1.7%).
  • Consumables, including groceries and liquor (+0.8%).
  • Hospitality (+1.5%).
  • Spending in the apparel industry rose by 4.5%.
  • Core retail spending (excl. vehicle-related industries) rose by 1.3%.

The Kiwi Dollar moved from $0.64259 to $0.64278 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.19% to $0.6436.

For the Aussie Dollar

The NAB Business Confidence Index fell from 4 to 1 in August.

The pullback came in spite of the RBA rate cuts over the summer, the removal of political uncertainty and personal tax relief.

The Aussie Dollar moved from $0.68663 to $0.68589 upon release of the figures. At the time of writing, the Aussie Dollar was down 0.10% to $0.6855.

Out of China

The annual rate of inflation held steady at 2.8% in August, coming in ahead of a forecast of 2.7%. Month-on-month, consumer prices rose by 0.7%, following on from a 0.4% rise in July. Economists had forecast consumer prices to rise by 0.5%.

Wholesale price inflation disappointed, with the Producer Price Index falling by 0.8% in August, following on from a 0.3% fall in July. Economists had forecast a 0.9% fall.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% to ¥107.38 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar. 2^nd quarter nonfarm payroll figures are due out ahead of the European open. With the ECB’s focus on labor market conditions, a fall in payrolls will weigh on the EUR early on.

French and Italian industrial production figures are also due out and will also influence.

Outside of the numbers, Brexit chatter and sentiment towards fiscal and monetary policy will also provide direction.

At the time of writing, the EUR was down by 0.05% to $1.1042.

For the Pound

It’s another busy day ahead on the data front. Key stats include August claimant count numbers and July wage growth numbers and unemployment rate.

We can expect the Pound to be sensitive to the numbers, though any moves will continue to be short-lived.

Parliament’s suspension on Monday leaves the UK and British politics in a precarious position. We can expect the Pound to be particularly responsive to the news wires over the course of the day…

The good news, for now, is that the chances of a no-deal Brexit have diminished, providing much-needed support. There’s the talk of negotiations with the EU going on in the background and Johnson may also be looking for alternative ways to avoid asking for an extension… There is also talk of Johnson exploring ways in which to avoid requesting an extension, however…

At the time of writing, the Pound was down by 0.06% to $1.2339.

Across the Pond

It’s a quiet day ahead on the economic calendar, with data limited to July’s JOLTs job openings. Following last week’s nonfarm payroll numbers, job openings will need to hold relatively steady to avoid spooking the Dollar.

While the headline numbers will have the greatest impact, expect market sensitivity to quit rates. A material fall in quit rates would reflect a deterioration in confidence in labor market conditions.

On the geopolitical front, UK Politics and updates on Brexit negotiations will influence demand for U.S Treasuries.

At the time of writing, the Dollar Spot Index was up by 0.10% to 98.380.

For the Loonie

It’s a relatively quiet day ahead on the economic calendar, with economic data out of Canada limited to housing start and building permit figures.

Barring an unexpected slide, we would expect the figures to have a relatively muted impact on the Loonie.

For now, monetary policy divergence continues to be in favor of the Loonie following last week’s BoC rate statement release.

The Loonie was down by 0.06% at C$1.3176, against the U.S Dollar, at the time of writing.