The EUR and USD in Focus Today, with a Busy Day of Stats

Earlier in the Day:

Economic data released through the Asian session was on the heavier side this morning, with key stats including building consent and business confidence figures out of NZ, employment and industrial production numbers out of Japan, new home sales, building approvals and private sector credit figures out of Australia and private sector PMI numbers out of China. On top of the stats is the BoJ’s heavily anticipated monetary policy decision due shortly and the press conference scheduled for later this morning.

For the Kiwi Dollar,

Building consents slumped by 7.6% in June, more than reversing May’s downwardly revised 6.9% increase.

The Kiwi Dollar moved from 0.68283 to $0.68264 upon release of the figures.

The ANZ Business Confidence Index slumped in July to levels not seen since May 2008, with a net 45% of those surveyed expecting general business conditions to deteriorate in the year ahead, following 39% in June.

Looking at the sub-indexes:

• A net 1% of firms are expecting to lift investment, down 3 points.
• Employment intentions rose by 1 point to +2%, supported by the services sector, with other sectors being negative.
• Profit expectations fell by 4 pints to -16.8%, with every sector in the red, retail the weakest at -28%.
• A net 37% of businesses expect it to be tougher to get credit.

The Kiwi Dollar moved from 0.6309 to $0.68173 upon release of the figures, before rising to $0.6821 at the time of writing, down 0.03% for the session.

For the Japanese Yen,

The June jobs / applications ratio stood at 1.62 in June, coming in ahead of a forecasted and May 1.60, while the unemployment rate rose from 2.2% to 2.4%, rising above a forecasted 2.3%

The Japanese Yen moved from ¥111.04 to ¥111.023 against the Dollar upon release of the figures

Industrial Production slumped by 2.1% in June, according to prelim figures, which was far worse than a forecasted 0.3% fall, following May’s 0.2% decline.

• Industries that contributed to the decline were chemicals (excl. drugs); petroleum and coal products and fabricated metals.
• Industries seeing a pickup in output included electronic parts and devices, iron and steel and transport equipment.

The Japanese Yen moved from ¥110.998 to ¥110.937 against the Dollar upon release of the figures, before easing to ¥111.04 to leave the Yen flat ahead of the BoJ policy decision.

For the Aussie Dollar,

HIA new home sales rose by 2.2%, the first monthly increase of the year, though not enough to reverse the year’s declines.

The Aussie Dollar moved from $0.74092 to $0.74041 upon release of the figures before recovering to $0.7409 levels, the choppy moves coming off the back of the private sector PMI numbers out of China.

Building approvals jumped by 6.4%, coming in well ahead of a forecasted 1.1% rise following May’s revised 3.2% slide. The rise was attributed to a 7.2% surge in private dwellings excluding houses, with private houses up by 5%.

Private sector credit rose by 0.3% in June, which was in line with forecasts, while rising from May’s 0.2% increase, with both housing and business credit rising by 0.3%.

The Aussie Dollar moved from $0.7413 to $0.74226 upon release of the figures, before easing back to $0.7420 at the time of writing, up 0.18% for the session.

Out of China,

The July manufacturing PMI stood at 51.2, falling short of a forecasted 51.3 and June 51.5.

July’s decline was attributed to bad weather and ongoing trade frictions with the U.S, new export orders contracting at the same pace as in June, while the pace of growth in new orders also slowed, the sub-index easing from 53.2 to 52.3.

The July non-manufacturing PMI stood at 54, coming up short of a forecasted hold at 55.0.

While focus has tended to be predominantly on the manufacturing number, the Chinese government’s efforts to rebalance the economy has seen the services sector grow to more than half of the Chinese economy, with the slower pace of growth in the services sector likely to place more pressure on the Chinese government to roll out fiscal policy measures to support the economy.

In the equity markets, it was a mixed bag through the early part of the day, the ASX200 bucking the trend with a 0.20% rise at the time of writing, while disappointing data weighed on the Nikkei and the CSI300 and the continued tech sell-off weighed on the Hang Seng, with Tencent Holdings sliding by more than 2%.

The Day Ahead:

For the EUR, it’s a particularly busy day ahead, with key stats including prelim July inflation figures out of France, Italy and the Eurozone, retail sales and employment figures out of Germany, 1^st estimate GDP numbers for the 2^nd quarter out of Spain and the Eurozone and the Eurozone’s unemployment rate.

We will expect focus to be on the Eurozone’s GDP and inflation figures, barring materially dire data out of Germany earlier in the morning, with the Eurozone’s GDP figures skewed to the downside for the EUR, while the core inflation is expected to rise to an annual rate of 1%, which should provide some support for the EUR and limit any damage from any weaker GDP figures.

At the time of writing, the EUR was flat at $1.1706.

For the Pound, it’s another quiet day ahead, with no material stats scheduled for release ahead of tomorrow’s manufacturing PMI and Super Thursday.

Direction through the day will continue to be hinged on sentiment towards the BoE’s anticipated moves on Thursday, which has provided some much needed support, as Brexit jitters continue to weigh.

At the time of writing, the Pound was down 0.10% to $1.3120.

Across the Pond, key stats through the day include the FED’s preferred Core PCE price index figures, personal spending and consumer confidence figures, with 2^nd quarter employment cost, PCE deflator and Chicago PMI numbers also scheduled for release.

We will expect focus to be on the key numbers, with Friday’s 2^nd quarter PCE price index figures having shown softer inflation in the quarter. While inflation figures are forecasted to be Dollar negative, personal spending and consumer confidence figures are forecasted to be Dollar positive, with the markets expecting the FED to maintain its rate path assuming the annual rate of core inflation holds at 2%, as forecasted.

At the time of writing, the Dollar Spot Index was up 0.04% to 94.386, with today’s stats and anticipated influence on tomorrow’s FOMC interest rate decision and stance towards September’s meeting likely to be the key drivers through the day.

For the Loonie, GDP and RMPI figures are scheduled for release this afternoon, with May’s monthly GDP number the key driver, which is forecasted to be Loonie positive.

At the time of writing, the Loonie was down 0.22% to C$1.3065 against the U.S Dollar, with today’s GDP number and NAFTA chatter to provide direction through the day.