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The Bank of England and Economic Data Put the Pound and the Dollar in Focus

It’s a busy day ahead, with economic data from the Eurozone and the U.S in focus. On the monetary policy front, the BoE and the Pound are in action…
Bob Mason
BoE

Earlier in the Day:

It was another relatively quiet day on the Asian economic calendar this morning. The Kiwi Dollar was in action, with December trade data in focus early in the day.

Outside of the numbers, the Asian markets responded to the FED’s monetary policy decision and Powell press conference. Falling U.S Treasury yields, in response to the FED, weighed on risk appetite early on.

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For the Kiwi Dollar

The trade deficit narrowed from NZ$4,850m to NZ$$4,310m year-on-year in December. Month-on-month, the trade balance shifted from an NZ$791m defect to an NZ$547m surplus.

According to NZ Stats,

  • Compared with December 2018, the trade defect was down from $6.2bn.
  • Annual exports jumped by NZ$2.7bn, while annual imports increased by NZ$835m.
  • The upside in exports came from the export of dairy products and beef.
  • Exports to China saw the largest annual increase, up by NZ$2.9bn (21%) from 2018.
  • On the import side, consumption goods drove the increase in imports.
  • The imports of consumption goods rose by NZ$804m from 2018.

The Kiwi Dollar moved from $0.65249 to $0.65269 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.11% to $0.6520.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥108.97 against the U.S Dollar, while the Aussie Dollar was down by 0.18% to $0.6742.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German and Eurozone unemployment figures are due out later this morning, along with prelim inflation figures out of Germany.

Expect Germany’s unemployment change figures for January to have the greatest impact on the EUR.

Barring a marked pickup in inflationary pressure, we would expect Germany’s prelim January inflation figures to have a muted impact on the EUR.

At the time of writing, the EUR was up by 0.03% to $1.1013.

For the Pound

It’s a big day ahead on the economic calendar. While there are no material stats to provide direction, the BoE is in action.

The markets had anticipated a rate cut at the start of the year. Economic data out of the UK last week shifted sentiment.

That leaves the vote count, the minutes, and BoE Governor Carney’s speech to influence on the day.

At the time of writing, the Pound was up by 0.02% to $1.3023.

Across the Pond

It’s another relatively busy day on the data front. Economic data includes the weekly jobless claims figures and, of greater influence, 4th quarter GDP numbers.

Expect any deviation from forecasts to have a material impact on the Dollar and appetite for riskier assets.

At the time of writing, the Dollar Spot Index was up by 0.02% to 98.01.

For the Loonie

It’s yet another quiet day ahead on the economic calendar, with no material stats due out of Canada.

A lack of stats will leave the Loonie in the hands of market risk appetite ahead of tomorrow’s GDP and RMPI numbers.

The Loonie was down by 0.02% at C$1.3202 against the U.S Dollar, at the time of writing.

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