While Geopolitical Risk Lingers, Stats Put the EUR and the Loonie in Focus

Economic data and geopolitics will keep the markets busy. Any response retaliation from China would likely overshadow the economic calendar…
Bob Mason
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Earlier in the Day:

It was a busy day on the economic calendar through the Asian session this morning.

The Japanese Yen, Kiwi Dollar and Aussie Dollar were all in action once more in the early part of the day.

Inflation and industrial production figures out of Japan, building consent figures from NZ and private sector credit numbers out of Australia provided direction early on in the day.

On the geopolitical front, the markets continued to wait out for China’s reaction to Trump’s signing of the HK Bill.

For the Kiwi Dollar

Building consents fell by 1.1% in October, month-on-month, partially reversing a 7.5% jump in September. Economists had forecast a 2.5% slide.

According to NZ Stats,

  • The decline was attributed to a drop in the number of apartments consented. Stand-alone houses rose by 7.3% in the month, reversing a 4.6% fall in September.

The Kiwi Dollar moved from $0.64181 to $0.64184 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.02% to $0.6421.

For the Japanese Yen

Tokyo’s core annual rate of inflation picked up to 0.6% in November, which was in line with forecasts. In October, the core annual rate of inflation had stood at 0.5%. According to consumer price figures released by the Ministry of Internal Affairs and Communication,

  • Prices for furniture and household utensils (+2.8%), for clothes and footwear (+2.1%), and culture and recreation (+2.1%) provided support.
  • There were also increases in prices for housing (+0.6%), medical care (+0.8%), and transportation and communication (+0.1%).
  • A 0.4% fall in prices for fuel, light, and water and a 6.1% slide in prices for education weighed.
  • Miscellaneous prices also hit reverse, falling by 1%.

The Japanese Yen moved from ¥109.513 to ¥109.519 upon release of the figures that preceded industrial production figures.

In October, industrial production tumbled by 4.2%, month-on-month, reversing a 1.7% rise in September. Economists had forecast a 2.1% slide.

According to the Ministry of Economy, Trade and Industry,

  • Industries that mainly contributed to the decline were:
    • Motor vehicles.
    • General-purpose and business orientated machinery
    • Production machinery.
  • Industries that mainly contributed to an increase were:
    • Electronic parts and devices.
    • Petroleum and coal products.
    • Ceramics, stone and clay products.

The Japanese Yen moved from ¥109.515 to ¥109.526 upon release of the figures. At the time of writing, the Japanese Yen was flat at ¥109.51 against the U.S Dollar.

For the Aussie Dollar

Private sector credit rose by just 0.1% in October, following on from a 0.2% increase in September. Economists had forecast a 0.3% rise, however.

According to figures released by RBA:

  • Month-on-month, housing credit rose by 0.3%, whilst personal and business credit fell by 0.6% and by 0.1% respectively.
  • Year-on-year, total credit rose by 2.5%, supported by a 3.0% rise in housing credit and a 2.7% rise in business credit. Personal credit slid by 4.7% when compared with October 2018.

The Aussie Dollar moved from $0.67693 to a low $0.67672 upon release of the figures. At the time of writing, the Aussie Dollar down by 0.06% to $0.6766.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include consumer spending and GDP figures out of France and retail sales and Germany and unemployment numbers out of Germany.

Prelim November inflation figures are also due out of Italy and the Eurozone, alongside the Eurozone’s unemployment rate.

Barring deviation from prelim, we would expect the French GDP numbers to have a muted impact on the EUR.

Consumer spending and unemployment figures will have the greatest impact on the EUR on the day.

A pickup in inflationary pressure would provide some support for the EUR, though any upside will likely be short-lived. The annual rate of inflation currently sits below 1% and the ECB is unlikely to respond to any pickup in inflationary pressure.

On the geopolitical front, any updates from Beijing and Washington on trade will also influence.

At the time of writing, the EUR was up by 0.02% to $1.1011.

For the Pound

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

The focus on the day will be on the live BBC televised debate later in the day.

In the early part of the day, we would expect the latest opinion polls to influence.

At the time of writing, the Pound was down by 0.01% to $1.2911.

Across the Pond

It’s another quiet day on the economic calendar, with the U.S session shorted for the Thanksgiving holidays.

There are no material stats due out to provide the Greenback with direction, with volumes likely to be on the lighter side.

Any chatter from the U.S or Beijing on trade will need monitoring throughout the day, however.

At the time of writing, the Dollar Spot Index was down 0.05% at 98.325.

For the Loonie

It’s a busy day on the economic calendar, with stats including 3rd quarter GDP and October RMPI numbers.

With the Bank of Canada monetary policy decision scheduled for next Wednesday, the Loonie will be particularly sensitive to the numbers.

Sentiment remains mixed towards the policy outlook. While the last minutes reflected concern amongst members over the economic outlook, BoC Governor Poloz last week talked of rates being at the right level to support the economy.

The Loonie was down by 0.02% to C$1.3285, against the U.S Dollar, at the time of writing.

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