Trade Hits the Aussie, with Brexit and GBP Still in the Limelight

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side, with key stats limited to October retail sales and trade figures out of Australia.

For the Aussie Dollar, the morning’s numbers were mixed, with retail sales coming in ahead of forecasts, whilst trade data disappointed.

According to the ABS:

October retail sales increased by 0.3%, coming in ahead of a forecasted 0.2% and September 0.1% increase.

• Clothing, footwear and personal accessory retailing led the gains in the sector, rising by 2.6%.
• Rises were also seen across 4 of the other retailing sectors, household goods retailing (+0.6%), other retailing (+0.5%), food retailing (+0.2%) and department stores (+0.4%).
• Only 1 sector saw red that being cafes, restaurants and takeaway food services, where sales fell by 0.9%.
• Online retail turnover contributed 5.9% to total retail turnover in original terms, up from a 5.6% rise in September, the highest level recorded in the series.

The trade surplus narrowed from a revised A$2.940bn to A$2.316bn in October, which came in below a forecasted A$3.1bn surplus.

• Exports of goods and services rose by 1% to A$38.045bn, while the imports of goods and services rose by 3% to A$35.729bn.
• The rise in exports was attributed to:
  • 4% (A$1,019m) rise in the exports of non-rural goods.
  • 62% (A$12m) rise in the exports of goods under merchanting.
  • Services rose by 1% (A$93m).
• Pinning back the export numbers were:
  • 24% (A$355m) fall in the exports of non-monetary gold.
  • 7% (A$277n) fall in the exports of rural goods.
• The increase in imports was attributable to:
  • 5% (A$582m) rise in the imports of intermediate and other merchandise goods.
  • 8% (A$481m) rise in the imports of capital goods.
  • 1% (A$105m) rise in the imports of consumption goods.
• Offsetting the upside in imports were:
  • 7% (A$26m) fall in the imports of non-monetary gold.
  • A$25m fall in services.

The Aussie Dollar moved from $0.72570 to $0.7252 before moving back to $0.7257 upon release of the figures. At the time of writing, the Aussie Dollar stood at $0.7233, down 0.47% for the session.

Elsewhere, the Japanese Yen stood at ¥112.78, against the U.S Dollar, the Yen up 0.36% for the session, the Yen on the move in response to a slide in the U.S futures markets that took the Asian majors into the red. Risk aversion weighed on the Kiwi Dollar, which was down 0.32% to $0.6877.

The Day Ahead:

For the EUR, economic data is limited to October factory order figures out of Germany. While the stats are on the lighter side, we can expect the EUR to respond to the numbers, concerns over the Eurozone economy pinning the EUR back, with trade tensions and the downward trend in private sector PMI numbers already raising red flags.

Forecasts are EUR negative, with factory orders forecasted to fall by 0.4%, which would reverse September’s 0.3% rise.

At the time of writing, the EUR was up 0.03% to $1.1347, with today’s stats the key drivers through the day.

For the Pound, there are no material stats scheduled for release, leaving the Pound in the hands of UK Parliament that continues to debate the Brexit deal ahead of next Tuesday’s vote.

At the time of writing, the Pound was down 0.09% at $1.2723, with Brexit chatter continuing to be the key driver through the day.

Across the Pond, following Wednesday’s national day of mourning, economic data is on the heavier side through the day, with key stats through the session including November’s ADP Nonfarm Employment change numbers, 3^rd quarter nonfarm productivity and unit labour cost figures, finalized Markit service sector and composite PMIs, the market’s preferred ISM non-manufacturing PMI numbers and U.S factory order figures.

With mixed sentiment towards the U.S economic outlook, today’s figures will certainly provide some direction, with labour market and the ISM survey figures key for the Dollar, though a slide in factory orders may pin back any upside from any solid employment and service sector numbers.

Outside the stats, we can expect trade war chatter to continue to influence, with the markets continuing to be uncertain over what lies ahead for the U.S and China on trade.

At the time of writing, the Dollar Spot Index was down 0.09 to 96.982, with today’s stats and trade talk to drive the Dollar.

For the Loonie, economic data scheduled for release includes November housing start figures and Ivey PMI, which will likely have a more significant impact on the Loonie later today.

Following the hammering on Wednesday, after the BoC’s comments on the effects of falling crude oil prices and global trade, the door was not completely closed on a near-term rate hike, which could see the Loonie claw back some of its losses, though the stats need to be good and some support from crude will also be needed.

Outside the data, BoC Governor Poloz is scheduled to speak and we can expect the Loonie to be sensitive to any policy chatter.

The Loonie was down 0.25% to C$1.3389 against the U.S Dollar at the time of writing, the Bank of Canada Governor and the Ivey PMI the key drivers through the day.