U.S Wholesale Inflation and Trade Chatter to Keep the USD in Focus

It could be a testy day ahead. A lack of stats will likely see the focus return to the economic outlook and the ongoing trade war ahead of U.S inflation numbers.
Bob Mason
Forex Symbols

Earlier in the Day:

Economic data was on the lighter side once more through the Asian session this morning.

Australia March business confidence figures provided direction early on.

For the Aussie Dollar,

The NAB Business Confidence Index increased from 0 to +7 in May. According to the latest NAB monthly business survey,

  • The Business Conditions Index fell from +3 to +1. There were also declines in the following sub-indexes:
    • The profitability sub-index fell from +1 to -3, with the trading sub-index falling from +8 to +3.
    • The outlook towards forward orders also weakened, with the sub-index falling from -2 to -3.
    • A recovery in the employment sub-index from -1 to +2 was the only positive for the month.
  • The upward move in confidence was attributed to the anticipated RBA rate cut earlier in the month.
  • With the forward-looking indicators flashing red, expectations are for business confidence to weaken again in June.

The Aussie Dollar moved from $0.69650 to $0.69578 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.06% to $0.6957.

Elsewhere,

At the time of writing, the Kiwi Dollar was down by 0.09% to $0.6603. The Japanese Yen was down by 0.14% to ¥108.60 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another quiet day ahead for the EUR.

The lack of stats will continue to leave the EUR in the hands of market sentiment towards the U.S and Eurozone economies.

Later in the day, any updates from either the U.S or China will also have an impact, as will May wholesale inflation figures out of the U.S.

FED Chair Powell has spoken of the FED’s willingness to step in and over concerns of softening inflationary pressures. Any weak numbers and expect the EUR to find support on the day.

At the time of writing, the EUR was flat at $1.1312.

For the Pound

It’s another busy day ahead.

Following mixed stats on Monday, focus shifts to labor market conditions.

While the market focus will be on the claimant count and average earnings, the unemployment rate will need to hold steady.

There is a harsh reality that inflationary pressures may begin to ease if there’s a material pullback in demand, even with a sliding Pound.

Outside of the numbers, expect chatter from Parliament to also provide direction. The leadership race enters its first major battle ahead of the 1st ballot on Thursday.

At the time of writing, the Pound was down by 0.01% to $1.2684,

Across the Pond

It’s also a relatively quiet day ahead on the economic data front.

U.S May wholesale inflation figures are due out. While the stats are on the lighter side, we can expect the Dollar to be sensitive to today’s figures.

Softer inflation is one of the key considerations for the FED. Weak numbers ahead of tomorrow’s consumer figures would support the shift in sentiment towards FED monetary policy.

Any updates from the U.S or China will also influence on the day.

At the time of writing, the Dollar Spot Index was up by 0.04% to 96.802.

For the Loonie

There are no material stats due out on the day.

Following a string of disappointing numbers, the markets may begin to refocus on the economic outlook. Softer demand for crude oil would be considered a negative for the Loonie.

The Loonie was down by 0.01% to C$1.3268, against the U.S Dollar, at the time of writing.

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