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U.S Retail Sales and Trade Put the Greenback in Focus

The economic calendar shifts focus to the U.S Dollar. Following Powell’s positive outlook on the economy, retail sales will need to impress…
Bob Mason
Arms trade business concept.

Earlier in the Day:

The economic calendar was on the quieter side through the Asian session this morning.

Key stats included October Business PMI figures out of New Zealand. Later on in the session, finalized September industrial production figures are due out of Japan.

On the monetary policy front, Bank of Canada Governor Poloz and RBA Assistant Governor Debelle are also due to speak in the early part of the day.

Outside of the numbers, FED Chair Powell’s 2nd testimony to Congress late on Thursday provided few surprises to influence the markets.

On the geopolitical risk front, more negative updates from the U.S – China trade talks failed to test risk appetite in the early hours. News of China having issues with the demand to ramp up the import of U.S agri products suggests that the Phase 1 agreement is not as close to being finalized as had previously been announced.

For the Kiwi Dollar

The Business PMI rose from 48.4 to 52.6 in October, as the manufacturing sector returned to expansion for the first time since June. According to the latest PMI Survey,

  • New orders continued to recover, with the new orders sub-index rising to 56.2, its highest level since May 2018. In September, the sub-index had stood at 50.9.
  • The employment sub-index held relatively steady, rising from 50.1 to 50.2.
  • Finished stocks, however, continued to contract, with the sub-index falling from 49.0 to 48.5.

The Kiwi Dollar moved from $0.63706 to $0.63767 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.17% to $0.6392.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.16% to ¥108.59 against the U.S Dollar, while the Aussie Dollar was up 0.15% to $0.6796.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats due out of the Eurozone include finalized October inflation numbers out of Italy and the Eurozone and the Eurozone’s September trade data.

Barring deviation from prelim figures, the Eurozone’s trade data and month-on-month consumer price moves will likely have the greatest influence on the EUR.

Outside of the numbers, geopolitical risk will continue to provide direction on the day.

At the time of writing, the EUR was up by 0.02% to $1.1024.

For the Pound

It’s a quiet day ahead on the data front. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats leaves the Pound firmly in the hands of UK politics and the general election opinion polls.

At the time of writing, the Pound was up by 0.02% to $1.2884.

Across the Pond

It’s a busy day on the economic calendar. Economic data out of the U.S include October retail sales, industrial production figures, and September business inventories.

Of less influence on the day are NY Empire State Manufacturing Index figures for November and import and export price figures for October.

While industrial production and business inventories will influence, retail sales figures will have the greatest impact on the day.

While FED is expected to stand pat on monetary policy, dire numbers could raise the prospects of further support. With the manufacturing sector in the doldrums, domestic consumption remains key to the U.S economy.

On the geopolitical front, updates on trade talks between the U.S and China will continue to influence.

The Dollar Spot Index was down by 0.01% to 98.156 at the time of writing.

For the Loonie

It’s a relatively quiet day on the economic calendar. September’s foreign securities purchases are due out later today. We can expect the numbers to have a muted impact on the Loonie, however.

Market risk appetite and sentiment towards trade will provide direction to crude oil prices and the Loonie.

Early in the day, Bank of Canada Governor Poloz is scheduled to speak, with any chatter on policy to also influence.

The Loonie was up by 0.08% to C$1.3237, against the U.S Dollar, at the time of writing. Further gains in crude oil prices provided early support.

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