Earlier in the Day:
It was a particularly busy start to the day on the economic calendar this morning. The Aussie Dollar, the Japanese Yen, and the Kiwi Dollar were in action in the early hours.
Later in the morning, the RBA will also deliver its first policy decision of the final quarter. With lockdown measures in place, however, it will all boil down to whether the RBA continues to hold an optimistic outlook…
For the Kiwi Dollar
Business confidence was back in focus. According to the NZIER, business confidence deteriorated in the 3rd quarter. A net 8% of businesses expect a deterioration in general economic conditions over the coming months. In the previous quarter, a net 9% had expected an improvement.
According to the NZIER survey,
- The building sector has gone from the most optimistic to the most pessimistic, with manufacturers also downbeat.
- COVID-19 driven uncertainty has led to more caution amongst businesses towards investments in buildings and plant and machinery.
- Firms were more positive about increasing headcount, however.
- Despite capacity pressures becoming more acute, businesses report a softening in costs and pricing in the quarter.
The Kiwi Dollar moved from $0.69614 to $0.69607 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.36% to $0.6944.
For the Japanese Yen
Inflation figures for September drew attention this morning.
In September, Tokyo’s core annual rate of inflation picked up from -0.3% to 0.1%, falling short of a forecasted 0.2%.
According to the Ministry of Internal Affairs and Communication,
- Prices for furniture & household utensils rose by 3.3%, with prices for fuel, light, & water charges up 2.2%.
- There were also prices increases for culture & recreation (4.1%), education (1.8%), and housing (0.6%).
- Prices for transportation & communication was down by 8.6%, however, with prices for medical care down 0.1%.
- There was no change in prices for clothing & footwear.
The Japanese Yen moved from ¥110.955 to ¥110.957 upon release of the figures.
Later in the morning, finalized service sector PMI figures had a muted impact on the markets.
In September, Japan’s Services PMI increased from 42.9 to 47.8 versus a prelim 47.4.
At the time of writing, the Japanese Yen was down by 0.06% to ¥111.000 against the U.S Dollar.
For the Aussie Dollar
Trade data was in focus this morning, with the markets looking to assess whether supply chain woes improved.
In August, Australia’s trade balance widened from A$12.117bn to A$15.077bn.
According to the ABS,
- Exports increased by 4%, while imports fell by 1% in August.
- General merchandise exports increased by 4%, supported by an 11% jump in rural goods exports.
- Net exports under merchanting fell by 8%, while non-monetary gold exports rose by 17%.
- Imports of general merchandise fell by 2% as a result of a 7% slide in the import of intermediate and other merchandise goods. Capital goods imports fell by 4%, while consumption goods imports rose by 4%.
- Non-monetary gold imports increased by 35%.
The Aussie Dollar moved from $0.72848 to $0.72799 upon release of the figures that preceded the RBA’s monetary policy decision. At the time of writing, the Aussie Dollar was down by 0.23% to $0.7264.
The Day Ahead
For the EUR
It’s a busy day ahead on the economic calendar. Service sector PMIs for Italy and Spain will be in focus early in the European session. Finalized service and composite PMIs for France, Germany, and the Eurozone will also provide direction.
On the monetary policy front, ECB President Lagarde is also scheduled to speak late in the day.
At the time of writing, the EUR was down by 0.13% to $1.1606.
For the Pound
It’s a relatively quiet day ahead on the economic calendar.
Finalized services and composite PMI figures for September will be in focus. Expect plenty of interest in the numbers, with upward revisions needed to support the Pound.
At the time of writing, the Pound was down by 0.15% to $1.3589.
Across the Pond
It’s a busy day ahead, with service sector activity and trade in focus.
Expect the market’s favored ISM Non-Manufacturing PMI to be the key driver.
At the time of writing, the U.S Dollar Spot Index was up by 0.09% to 93.857.
For the Loonie
It’s a relatively quiet day ahead for the Loonie. Trade data for August will be in focus later today.
With little else for the markets to consider, expect today’s stats to influence.
At the time of writing, the Loonie was down by 0.18% to C$1.2612 against the U.S Dollar.
For a look at all of today’s economic events, check out our economic calendar.