Bank of Canada

The Bank of Canada and Brexit Put the Loonie and the Pound in Focus

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar was in action, with economic data from China also in focus.

For the Aussie Dollar

The Westpac Consumer Sentiment Index jumped by 18% to 93.8 in September. In August, the index had fallen by 9.5% to 79.5.

According to the latest Westpac Report,

  • A marked slowdown of new cases in Victoria as a result of containment measures and no evidence of the 2nd wave in NSW or Queensland supported consumer sentiment.
  • Prior to the Victoria 2nd wave, the Index had stood at 93.7 in June.

Looking at the sub-indexes:

  • Finances vs a year ago jumped by 11.2% and the sub-index was 3.7% higher than this time last year.
  • The Finances, next 12-months sub-index also jumped by 11.2% to be 4.5% higher than in Sept-09.
  • Sentiment towards the economy was more impressive, though still down when compared to last year.
    • The Economy, next 12-months, sub-index surged by 41% but was still down by 18% from Sept-09.
    • The Economy, next 5-years sub-index fared better. A 19% jump led the Index up by 2% from Sept-19.
  • The time to buy a major household item sub-index rose by 16.3%, while still down by 12.1% from a year ago.
  • Also positive was a 14.8% slide in the Unemployment Expectations Index. The Index was still up by 4.2% compared with Sept-19, however.

The Aussie Dollar moved from $0.72148 to $0.72195 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.72165.

Out of China

Inflation figures for August were in focus this morning.

In August, consumer prices rose by 0.4%, month-on-month, following a 0.6% rise in July. Economists had forecast a 0.4% increase.

The annual rate of inflation eased from 2.7% to 2.0% in August.

Wholesale deflationary pressures also eased, however. In August, the producer price index fell by 2.0%, year-on-year, following a 2.4% decline in July. Economists had forecast a 2.0% drop.

The Aussie Dollar moved from $0.72144 to $0.72172 upon release of the figures

Elsewhere

At the time of writing, the Japanese Yen was up by 0.10% ¥105.92 against the U.S Dollar, with the Kiwi Dollar up by 0.01% to $0.6620.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats to provide the EUR with direction on the day.

A lack of stats will leave the ECB in focus, with the markets expecting some chatter to offset Dollar weakness.

We would expect market risk sentiment to also influence on the day, however.

At the time of writing, the EUR was down by 0.03% to $1.1775.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

That leaves the Pound firmly in the hands of Brexit chatter that has been negative for the Pound this week.

At the time of writing, the Pound was down by 0.15% to $1.2963.

Across the Pond

It’s a busier day ahead for the U.S Dollar, with July’s JOLTs job openings due out later today.

Following the recent labor market numbers, the July figures will need to continue to support a positive outlook on the labor market.

Cracks in the economic recovery have begun to form, driving the FED into a more defensive position. Weak numbers would likely weigh on riskier assets.

The Dollar Spot Index was up by 0.08% to 93.522 at the time of writing.

For the Loonie

It’s a big day ahead. While economic data is limited to August housing starts, the BoC monetary policy decision will draw plenty of attention.

First up since the FED’s new monetary policy framework rollout, the BoC could lay the groundwork for other Central Banks.

The last thing the BoC needs is a rampaging Loonie amidst the economic recovery from the COVID-19 pandemic.

At the time of writing, the Loonie was flat at C$1.3236 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.