Trade Chatter Remains the Key Driver, with Stats on the Lighter Side

A sense of calm in the forex markets early on as the U.S futures point to a positive open in the equity markets. It could all change in a second…
Bob Mason
Currencies 10

Earlier in the Day:

The economic calendar was on the quieter side through the Asian session this morning. March current account figures out of Japan and April business confidence figures out of Australia provided direction early on.

For the Japanese Yen,

The non-seasonally adjusted current account surplus widened from ¥2.677tn to ¥2.848tn in March, coming up short of a forecasted ¥3.161tn. The adjusted current account surplus narrowed from ¥1.96tn to ¥1.27tn. Forecasts were for the surplus to narrow to ¥1.71tn.

The Japanese Yen moved from ¥109.201 to ¥109.173 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.22% to ¥109.54 against the U.S Dollar. While the current account surplus was negative for the Yen, the pullback came off the back of Monday’s strong rally in response to China’s retaliation on trade.

For the Aussie Dollar,

The NAB Business Confidence rose from 0 to 1 in April, which was in line with forecasts. According to the NAB survey,

In April, the business conditions index fell by 4 points to +3, with the decline attributed to falls across a number of components:

  • The employment index fell to -1, with the trading and profitability sub-indexes each sliding by 4 points, the 3 were below the average in April.
  • In spite of the 1 point increase in business confidence, the index remained well below the average.
  • Forward indicators were also still in the negative suggesting more doom and gloom to come.

The Aussie Dollar moved from $0.69530 to $0.69543 upon release of the figures. At the time of writing, the Aussie Dollar up 0.13% to $0.6953. While the Aussie Dollar found early support, weaker employment index numbers will be a concern for the RBA.

Elsewhere,

At the time of writing, the Kiwi Dollar was up 0.26% to $0.6584.

In the equity markets, it was a bad start to the day. The Hang Seng played catch-up after Monday’s close, down by 2.08%. Close behind were the Nikkei and ASX200, which were down by 1.32% and by 1.22% respectively. The CSI300 was down by just 0.18% at the time of writing.

The Day Ahead:

For the EUR,

The economic calendar is on the busier side later this morning. Key stats due out of the Eurozone include March economic sentiment figures out of Germany and the Eurozone and industrial production numbers out of the Eurozone.

Of less influence are finalized April inflation numbers due out of Spain and Germany earlier in the day.

While Germany’s economic sentiment figure tends to have the greatest influence on the EUR, industrial production numbers will also need to be considered.

Outside of the numbers, trade war chatter will also have an impact throughout the day.

At the time of writing, the EUR was up 0.09% to $1.1232.

For the Pound,

Wage growth and unemployment figures are due out of the UK later this morning. While wage growth and the claimant count numbers will have the greatest impact, the unemployment rate will need to hold steady at 3.9% to support an upside in the Pound.

While the stats will have some impact, Brexit will remain the focal point through the week.

Will there be a 2nd Referendum or can the Tories and Labour deliver a deal that keeps halts rising support for the Brexit Party?

At the time of writing, the Pound was up 0.03% to $1.2962.

Across the Pond,

It’s another quiet day on the economic calendar. March import and export price figures are due out of the U.S this afternoon.

Barring better than expected figures, the April numbers are unlikely to have too much influence this time around. It may be an altogether different story in the coming months, however, as the markets look out for the effects of the latest tariff hike.

Outside of the numbers, U.S – China trade and geopolitical risk, in general, will continue to drive risk sentiment on the day.

At the time of writing, the Dollar Spot Index was flat at 97.32.

For the Loonie,

It’s another quiet day for the Loonie, with no material stats scheduled for release. While there are no stats, OPEC’s monthly report will provide some direction in the early afternoon.

Supply and demand will need to be in check and, with Iran sanctions biting, OPEC may be looking to manage output amidst the uncertain surrounding U.S – China trade negotiations, or lack of…

Any hint of a lift in output and expect the Loonie to come under pressure. On the U.S- China trade front, positive updates would continue to be considered Loonie positive.

The Loonie was up 0.06% at C$1.3470, against the U.S Dollar, at the time of writing.

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