A Light Economic Calendar Leaves COVID-19 and Capitol Hill in Focus

Earlier in the Day:

It’s was a relatively quiet start to the week on the economic calendar this morning. The Japanese Yen was in action in the early part of the day.

Volumes were on the lighter side, with the Australian and New Zealand markets closed today.

For the Japanese Yen

Industrial production stalled in November, following a 4.0% rise in October. Economists had forecast a 1.2% increase.

According to prelim figures from the Ministry of Economy, Trade, and Industry,

  • Industries that mainly contributed to the upside were:
    • Production machinery.
    • General-purpose and business orientated machinery.
    • Iron, steel, and non-ferrous metals.
  • Industries that mainly contributed to the downside were:
    • Motor vehicles.
    • Inorganic and organic chemicals.
    • Plastic products.

The Japanese Yen moved from ¥103.544 to ¥103.525 upon release of the numbers. At the time of writing, the Japanese Yen was down by 0.14% to ¥103.58 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was flat at $0.7605, with the Kiwi Dollar up by 0.06% to $0.7121.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar, with the French job seeker total figures in focus later today.

We don’t expect too much influence on the EUR, however, with COVID-19 news updates and Brexit in focus.

The markets are expecting the UK Parliament to support the agreement, so any deviation would test support for the EUR.

At the time of writing, the EUR was up by 0.09% to $1.2204.

For the Pound

It’s a particularly quiet day ahead on the economic calendar, with the UK markets closed. There are no material stats to consider through the day, which leaves the Pound in the hands of Brexit chatter.

The UK Parliament is set to vote on the Brexit agreement this Wednesday. Any talk of voting against the agreement would test support for the Pound.

While Brexit remains a key driver, COVID-19 news will also continue to influence.

At the time of writing, the Pound was down by 0.06% to $1.3552.

Across the Pond

It’s a quiet day ahead on the economic calendar. There are no material stats to provide direction, leaving the Dollar in the hands of COVID-19 and chatter from Capitol Hill.

Trump’s last moves as U.S President and any updates on the stimulus package will influence.

Early this morning, news hit the wires that Trump had signed the pandemic aid and spending bill.

At the time of writing, the Dollar Spot Index was up by 0.01% to 90.233.

For the Loonie

It’s also a quiet start to the week on the economic data front. There are no material stats due out, with the Canadian markets closed. The lack of stats leaves the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was up by 0.1% to C$1.2844 against the U.S Dollar.

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

Weekly Asia-Pacific Currency Recap: Yen, Aussie, Kiwi Weaken as Safe-Haven Demand Drives Greenback Higher

The major Asia-Pacific currencies edged lower last week as the U.S. Dollar strengthened on position-squaring and profit-taking ahead of the long-holiday weekend. There was some volatility early in the week which made the Japanese Yen a less-desirable safe-haven while driving down demand for the higher-risk Australian and New Zealand Dollars.

There was little domestic data in Japan, Australia and New Zealand to drive the price action, but the recent movement indicates traders are throwing their attention to the weaker U.S. Dollar.

Traders have been dumping greenbacks, while buying Yen, Aussie and Kiwi because of expectations of a faster recovery in the global economy due to the rollout of the coronavirus vaccines. An accommodative Fed and new fiscal stimulus from the U.S. government has also been capping the U.S. Dollar.

Japanese Yen

The Japanese Yen fell to a more than one-week low on Monday in a holiday-shortened week on fears about a fast-spreading new coronavirus strain that was discovered in the U.K., prompting investors to seek safety in the U.S. Dollar.

Last week, the USD/JPY settled at 103.500, up 0.187 or +0.18%.

Low liquidity, with many traders logged out for the year, exaggerated the speed and size of the dollar’s gains against the Yen, too, as stop-loss mechanisms dumped investors out of bets against the greenback.

Domestic economic data was mixed. Bank of Japan (BOJ) Core CPI fell 0.1%. Tokyo Core CPI dropped -0.9% and Retail Sales rose 0.7%, missing the estimate of 1.8%.

The Unemployment Rate rose 2.9%, better than the 3.1% forecast and Housing Starts fell 3.7%, but beat the -4.8% estimate.

Australian Dollar

The Australian Dollar edged lower last week with most of the loss coming in Monday’s session as investors dumped the higher-yielding currency on worries over a fast-spreading new coronavirus strain in the U.K. Money flowed out of the Aussie and into the safe-haven U.S. Treasurys and U.S. Dollar. Investors also shed risk in the global equity markets.

Last week, the AUD/USD settled at .7600, down 0.0023 or -0.30%. Despite the lower close, the Forex pair remained within striking distance of its 2-1/2 year high hit earlier in the week.

After the initial break at the start of the week, the Aussie spent the next two session clawing back most of those losses after experts said there was no evidence that vaccines would not protect against the new virus variant. Nonetheless, Britain’s chief scientific adviser said that in the meantime tighter restrictions on public life in Britain were likely.

New Zealand Dollar

The New Zealand Dollar also finished marginally lower, tracking the same pattern as the Australian Dollar and Japanese Yen, and for the same reason – fear the new coronavirus variant could slow down the global economy recovery. A short-covering rally in the U.S. Dollar also weakened the commodity-linked currency.

Last week, the NZD/USD settled at .7124, down 0.0017 or -0.24%.

Following its steep sell-off on Monday, Kiwi bulls regained their composure to retrace more than 50% of its earlier losses. The move was driven by a rise in risk appetite on the expectations of a Brexit trade deal between the U.K. and the European Union. Also helping to underpin the New Zealand Dollar was the announcement of a new stimulus package agreement in the United States after several months of negotiations.

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

Brexit Update – The Markets Await Details as the Pound Inches towards $1.36

The Latest

After a gloomy start to the week for the Pound, a real sense of hope has returned, supporting the Pound and riskier assets.

With Brexit negotiations continuing this week, news hit the wires late on Wednesday that a deal was imminent.

The British PM reportedly briefed the cabinet, with the UK Parliament having only 7-days to ratify any agreement.

For Parliament and the markets, the devil will be in the details. Of particular interest will be what concessions Boris Johnson has made to get over the finishing line.

Both Ursula von der Leyen and Boris Johnson were involved in negotiations this week to end the deadlock.

According to news reports, quotas on different species of fish were remaining issues being ironed out overnight on Wednesday.

What’s next?

If an agreement is in fact reached today, the UK Parliament and EU Parliament will need to ratify the agreement.

All EU member states will need to agree to the terms of the agreement. For the UK Parliament, the House of Commons and the House of Lords will need to vote on the agreement.

While Parliament is in recess, a session could be called early next week to provide time to debate and then vote on the agreement.

There’s unlikely to be much wriggle room for amendments, however, when considering the duration of talks.

Following the recent House of Lords vote against the Internal Market Bill, there may also be some apprehension ahead of the vote. A House of Lords vote against the agreement could bring into question, once more, the future of the House of Lords…

For the EU and the European Parliament, the time has run out, which means that the EU would vote retrospectively in the New Year.

In recent weeks, EU Chief Negotiator Barnier has kept EU member states updated on progress and terms. There should, therefore, be no surprises and allows for a provisional application ahead of an EU Parliament ratification.

The Pound

At the time of writing, the Pound was up by 0.44% to $1.35474. As the Pound inches towards $1.36 levels, a surge to $1.40 could be on the cards once both sides announce any agreement.

Once the dust settles, however, we can expect some Pound sensitivity to chatter from peers and Members of Parliament.

The markets will need to remain confident that any agreement would be ratified to support any upside from this week. With volumes on the lighter side, leaving liquidity thin, any moves could also be more significant.

GBPUSD 241220 Daily Chart

A Silent Economic Calendar Leaves Brexit and the Pound in the Spotlight

Earlier in the Day:

It’s was a particularly quiet start to the day on the economic calendar this morning. There were no material stats markets to consider through the Asian session this morning.

The lack of stats left Brexit and COVID-19 news updates, along with chatter from Capitol Hill to provide direction early on.

For the Majors

At the time of writing, the Aussie Dollar was down by 0.01% to $0.7574, with the Kiwi Dollar down by 0.01% to $0.7096. The Japanese Yen was up by 0.02% to ¥103.55 against the U.S Dollar.

The Day Ahead:

For the EUR

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

German and Italian markets are closed, with France scheduled for an early close.

The lack of stats ahead of the holidays will leave the EUR in the hands of Brexit and COVID-19 news updates.

At the time of writing, the EUR was up by 0.02% to $1.2189.

For the Pound

It’s also a particularly quiet day ahead on the economic calendar. There are no material stats to consider through the day, leaving the Pound in the hands of Brexit news.

Further updates on the new coronavirus strain and plans to combat the more virulent strain will also influence.

The UK markets are scheduled for a shortened session ahead of tomorrow’s close.

At the time of writing, the Pound was up by 0.14% to $1.3512, with the upside coming on the news of an imminent deal.

Across the Pond

It’s a quiet day ahead on the economic calendar. There are no material stats to provide the Dollar with direction, with the U.S markets scheduled for an early close.

A lack of stats will leave market sentiment towards the stimulus bill and COVID-19 news updates to influence.

On Thursday, the Dollar Spot Index slid by 0.27% to 90.413.

For the Loonie

It’s a quiet day ahead on the economic data front. There are no material stats due out, with the Canadian markets set for an early close.

The lack of stats will leave the Loonie in the hands of COVID-19 news in a shortened session.

At the time of writing, the Loonie was flat at C$1.2848 against the U.S Dollar.

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

Brexit and COVID-19 Remain Key Drivers. U.S Stats Put the U.S Economy in Focus

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action in the early part of the day.

Away from the economic calendar, Brexit and COVID-19 news updates also influenced.

For the Aussie Dollar

In November, total credit increased by 0.10%, month-on-month.

According to the RBA,

  • Housing credit rose by 0.3%, following a 0.3% increase in October.
  • Personal credit was flat, following a 0.7% slide in October.
  • Business credit continued to decline, however. In November, business credit fell by 0.2%, following a 0.3% decline in October.
  • Year-on-year, total credit was up by 1.7%, which was down from 2.4% in November 2019.
  • Personal credit weighed heavily, tumbling by 12.4%, year-on-year.

The Aussie Dollar moved from $0.75380 to $0.75355 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7539,

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7041, with the Japanese Yen up by 0.09% to ¥103.55 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Finalized 3rd quarter GDP numbers are due out of Spain in the early part of the session.

We don’t expect the numbers to influence the EUR, however, with Brexit and COVID-19 in focus as the holidays approach.

At the time of writing, the EUR was up by 0.09% to $1.2174.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to consider through the day, leaving the Pound in the hands of Brexit news.

At the time of writing, the Pound was up by 0.19% to $1.3386.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include weekly jobless claims, November inflation, personal spending figures, and durable goods orders.

Following disappointing retail sales figures last week, the Dollar could find further support should today’s figures also disappoint.

Ultimately, the jobless claims figures will have the greatest impact, with another rise likely to test support for riskier assets

Finalized consumer sentiment and November new home sales figures are also out but will likely have a muted impact on the Greenback.

Away from the economic calendar, COVID-19 news updates will need monitoring on the day.

At the time of writing, the Dollar Spot Index was down by 0.11% to 90.557.

For the Loonie

It’s a relatively quiet day ahead on the economic data front. October GDP figures are due out that will provide the Loonie with direction.

With the Bank of Canada in a holding pattern, today’s numbers would need to be dire, however, to shift sentiment towards monetary policy.

Expect crude oil inventory numbers to also provide direction on the day.

At the time of writing, the Loonie was up by 0.07% to C$1.2899 against the U.S Dollar.

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

Brexit and COVID-19 Keeps the Pound in Focus, as Riskier Assets Struggle Early on

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action in the early part of the day.

While the Aussie Dollar responded to the morning stats, the markets also responded further to news of the new coronavirus strain in the UK. Riskier assets took a hit early on, in spite of U.S lawmakers delivering a U.S stimulus package on Monday.

For the Aussie Dollar

Retail sales jumped by 7% in November, according to prelim figures, coming in well ahead of a forecasted 0.6% decline. In October, retail sales had risen by 1.4%.

According to the ABS,

  • Household goods retailing surged by 13% to lead the gains. Black Friday sales together with major product releases in the electrical sub-group contributed.
  • The state of Victoria led the way, with sales rising by 21% in response to a full month without restrictions.
  • Retail sales excl. Victoria rose by a more modest 2.7% in the month.

The Aussie Dollar moved from $0.75746 to $0.75720 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.24% to $0.7569.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.28% to $0.7082, with the Japanese Yen down by 0.02% to ¥103.34 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. GfK Consumer Climate figures for January are due out of Germany at the European open.

With the government reintroducing containment measures, consumers will be torn between the latest lockdown and COVID-19 vaccine news.

Away from the numbers, Brexit news updates will also influence.

At the time of writing, the EUR was down by 0.09% to $1.2233.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Finalized 3rd quarter GDP figures are due out along with 3rd quarter current account figures.

We don’t expect the numbers to provide the Pound with direction, however.

The market focus will be on Brexit and COVID-19 updates throughout the day.

At the time of writing, the Pound was down by 0.31% to $1.3422.

Across the Pond

It’s a busier day ahead on the economic calendar. Key stats include finalized 3rd quarter GDP and November existing home sales figures.

Barring a marked downward revision to GDP numbers, the stats are unlikely to have a material impact on the Dollar or risk sentiment.

The market focus will remain on Brexit and COVID-19 news. For the Dollar, support would kick in should there be evidence of a spread of the new coronavirus strain beyond the EU.

At the time of writing, the Dollar Spot Index was up by 0.17% to 90.194.

For the Loonie

It’s another particularly quiet day ahead on the economic data front. There are no material stats to provide the Loonie with direction.

The lack of stats will continue to leave the Loonie in the hands of COVID-19 news.

At the time of writing, the Loonie was down by 0.05% to C$1.2863 against the U.S Dollar.

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

Brexit Update – Pound Takes a Double Hit from Stalled Talks and a Second Strain

The Latest

Another weekend passes and still no progress towards an EU-UK trade agreement.

Once more, EU chief negotiator Barnier attempts to put a positive spin on it. In reality, however, the holidays are rapidly approaching, as is the end of Britain’s transition period.

From an EU perspective, their deadline of Sunday, 20th December passed with little fanfare. UK fisheries reportedly continue to be a hurdle to a trade agreement.

With the end of the transition period approaching, we had talked of heightened volatility. Adding to the downside this morning, however, was news of a new coronavirus strain identified in the UK. Neighboring countries responded to the news by restricting travel from the UK. Countries that have, so far, restricted travel from the UK include Austria, Belgium, Bulgaria, France, Germany, Italy, and the Netherlands.

The British government also reintroduced lockdown measures, which will result in a gloomy end to a dire year for the British economy.

The Brexit Hurdle

According to reports from the weekend, UK fisheries remain the key hurdle, with the likes of Macron unwilling to compromise.

When considering the small contribution to the EU and the British economy, a no-deal Brexit as a result of the EU’s hard stance on unwavering access to UK fisheries would be perplexing.

As things stand, the markets appear confident that both sides will reach an agreement before the end of the year. Such an outcome, however, would likely need the EU to take a softer stance on access to UK fisheries.

With talks continuing this week, expect further Pound sensitivity to updates from the EU and from Britain.

The markets could become less hopeful of a deal if there is a lack of progress going into the 2nd half of the week.

The Pound

At the time of writing, the Pound was down by 1.81% to $1.32761, reversing most of last week’s 2.27% gain.

Having found support from the rollout of vaccinations and a decision to extend Brexit talks, it was a double hit for the Pound this morning.

More details on the new coronavirus strain are going to be needed to ease downward pressure. At a minimum, the markets would need a confirmation that the new strain is not resilient to the COVID-19 vaccine. Ultimately, however, some progress towards an EU-UK trade agreement will be needed to appease the markets.

The hope is that the EU will soften its stance at the last minute. With another deadline passing, however, and the EU standing firm, it remains to be seen whether such a shift in position will materialize.

For the Pound, the worst-case-scenario would be a broader shutdown of borders, an extended lockdown period, and a continued lack of progress towards a Brexit deal.

Later today, Boris Johnson will be holding an emergency Cobra meeting as more EU nations ban UK travel. The markets will be expecting a press conference. Areas of focus will include Brexit and the impact of border shutdowns on supply chains.

There have already been calls from within the UK for an extension to the transition period.

GBPUSD 211220 Daily Chart

A Light Economic Calendar Leaves Brexit, COVID-19, and Capitol Hill in Focus

Earlier in the Day:

It’s was a quiet start to the week on the economic calendar this morning. There were no material stats for the markets to consider in the early part of the day. While there were no stats, the PBoC was in action at the start of the day.

While there were no stats, a lack of progress towards a U.S stimulus package and COVID-19 news weighed on risk sentiment.

From China

The PBoC left loan prime rates unchanged this morning, which was in line with market expectations.

For December, the 3-year Loan Prime Rate and 5-year Loan Prime Rate were left unchanged at 3.85% and 4.65% respectively.

Positive economic data from China through the 4th quarter continued to reflect the economic recovery from the 2nd quarter meltdown. The decision to leave rates unchanged was in line with forward guidance from earlier in the year, supported by an optimistic outlook towards the economic recovery.

The Aussie Dollar moved from $0.75980 to $0.75946 upon the PBoC decision. At the time of writing, the Aussie Dollar was down by 0.43% to $0.7589.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.49% to $0.7101, while the Japanese Yen was up by 0.02% to ¥103.28 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Flash consumer confidence figures for the Eurozone are due out later today.

The markets will be looking for a pickup in consumer confidence fueled by the recent COVID-19 vaccine news.

Away from the economic calendar, however, Brexit, COVID-19 news, and updates from Capitol Hill will remain the key drivers.

At the time of writing, the EUR was down by 0.38% to $1.2211.

For the Pound

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

A lack of stats will leave the Pound firmly in the hands of Brexit and COVID-19 news updates.

From the weekend, there was a lack of progress towards Brexit. More alarmingly, however, was the discovery of a new strain of the Coronavirus. As a result, the UK Government was forced to reintroduce immediate lockdown measures.

At the time of writing, the Pound was down by 1.06% to $1.3379.

Across the Pond

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

The lack of stats will leave the Dollar in the hands of COVID-19 news updates and Capitol Hill. A lack of progress towards a stimulus package would support demand for the Dollar.

Expect any negative chatter on Brexit to also support the Greenback.

At the time of writing, the Dollar Spot Index was up by 0.31% to 90.295.

For the Loonie

It’s also a particularly quiet day ahead on the economic data front. There are no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of COVID-19 news and updates from Capitol Hill.

At the time of writing, the Loonie was down by 0.24% to C$1.2819 against the U.S Dollar.

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

Economic Data, Brexit, and Capitol Hill to drive the Majors

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day. Later this morning, the Bank of Japan will deliver its final monetary policy decision of the year.

For the Kiwi Dollar

November trade and business confidence figures were in focus early this morning.

Month-on-month, New Zealand’s trade balance rose from a NZ$472m deficit to a NZ$252m surplus. Economists had forecast a surplus of NZ$250m.

Year-on-year, the trade surplus widened from NZ$2,220m to NZ$3,260m.

According to NZ Stats,

  • Total goods exports fell by 0.2% to NZ$5.2bn from November 2019.
    • Meat and offal exports fell by 11%, with other export commodities and mechanical machinery and equipment also falling.
    • Aircraft and parts, respiratory equipment, infant formula, and exports of live cattle offset some of the declines.
  • Total goods imports slid by 17% to NZ$5.0bn from near-record monthly imports in November 2019.
    • Disruptions to global supply chains and delays at NZ ports weighed.

The Kiwi Dollar moved from $0.71510 to $0.71463 upon release of the figures that preceded business confidence numbers.

In December, the ANZ Business Confidence Index jumped by 16 points to 9.4%. In November, the Index had risen from -15.7% to -6.9%.

According to the ANZ report,

  • Headline business confidence was back in positive territory for the first time since August 2017.
  • Own activity was 13 points higher, at 21.7%, its highest level since March 2018.
  • Every activity indicator was on the rise, with inflationary pressures building.
    • Investment intentions increased by 8 points to 8.6%.
    • Employment intentions rose by 9 points, with a net 8.8% of respondents planning to hire more staff.
    • Capacity utilization was up by 3 points to 9.3%.
    • Profit expectations also returned to positive territory, with a net 6.8% of firms expecting higher profits.

The Kiwi Dollar moved from $0.71462 to $0.71493 upon release of the figures. At the time of writing, the Kiwi Dollar was flat at $0.7149.

For the Japanese Yen

National inflation figures for November were in focus ahead of the BoJ monetary policy decision later this morning.

Core consumer prices fell by 0.9%, year-on-year, in November, following a 0.7% decline in October. Economists had forecast a 0.9% slide.

Year-on-year, consumer prices also fell by 0.9%, following a 0.4% decline in October.

The Japanese Yen moved from ¥103.128 to ¥103.126 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.10% to ¥103.31 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.09% to $0.7615.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany’s IFO Business Climate Index and wholesale inflation figures are due out later this morning.

Expect the IFO numbers to have the greatest influence, with the markets expecting a marked pickup in sentiment.

Away from the economic calendar, however, Brexit and updates from Capitol Hill will also provide direction.

At the time of writing, the EUR was down by 0.11% to $1.2255.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Key stats included November retail sales figures.

Following the BoE monetary policy decision on Thursday and the impact of lockdown measures, the markets may be forgiving with COVID-19 vaccinations underway.

While any disappointing numbers will test Pound support, direction on the day will ultimately come from Brexit talks. There are less than 2-weeks remaining until the end of Britain’s transition period.

At the time of writing, the Pound was down by 0.23% to $1.3554.

Across the Pond

It’s a quiet day ahead on the economic calendar. 3rd quarter current account figures are due out of the U.S that will likely be brushed aside.

On the day, the focus will remain on Capitol Hill and COVID-19 news updates.

At the time of writing, the Dollar Spot Index was up by 0.08% to 89.896.

For the Loonie

It’s a busier day ahead on the economic data front. October retail sales figures are due out along with house price figures.

Expect the retail sales figures to have the greatest influence.

Away from the economic calendar, however, progress towards a widespread rollout of the COVID-19 vaccine remains Loonie positive.

At the time of writing, the Loonie was down by 0.12% to C$1.2735 against the U.S Dollar.

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

The BoE, Capitol Hill, and U.S Stats Put the Pound and the Dollar in Focus

Earlier in the Day:

It’s was another busy start to the day on the economic calendar this morning. The Aussie Dollar and the Kiwi Dollar were in action in the early part of the day.

For the Kiwi Dollar

3rd quarter GDP figures were in focus in the early part of the day.

In the 3rd quarter, the New Zealand economy expanded by 14.00%, reversing an 11.00% contraction from the 2nd quarter. Economists had forecast the economy to grow by 13.5%, quarter-on-quarter.

According to NZ Stats,

  • Service Industries expanded by 11.1%, with goods-producing industries expanding by 26.0%.
  • Across the services sector, the retail, accommodation, and restaurants category was the main driver, surging by 42.8%.
  • Primary industries were by a more modest 4.6%, however.
  • The annual GDP declined in the year to September 2020 by 2.2%, however.
  • In spite of the rebound, the effects of the COVID-19 were still apparent at varying levels across different industries.

The Kiwi Dollar moved from $0.71039 to $0.71109 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.30% to $0.7133.

For the Aussie Dollar

Employment figures were in focus.

According to the ABS,

  • Employment rose by 90.0k in November, following a 178.8k jump in October. Economists had forecast a 50.0k rise.
  • Total employment rose by 82.4k, following a 97.0k increase in October.
  • The unemployment rate fell from 7.0% to 6.8%, whilst the participation rate rose from 65.8% to 66.1%. Economists had forecast an unemployment rate of 7.0% and a participation rate of 66.0%.

The Aussie Dollar moved from $0.75719 to $0.75782 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.05% to $0.7581.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.07% to ¥103.40 against the U.S Dollar, while

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Finalized November inflation figures for the Eurozone are due out later today.

Barring any marked revisions to prelim figures, however, the numbers are unlikely to influence.

Expect COVID-19 news and any updates from Brexit talks and U.S stimulus talks to remain key drivers.

At the time of writing, the EUR was up by 0.02% to $1.2203.

For the Pound

It’s a busy day ahead on the economic calendar. While there are no material stats due out to provide the Pound with direction, the Bank of England is in action later today.

With Brexit negotiations ongoing and COVID-19 vaccinations being administered, the BoE may want to hold off on any moves.

Expect forward guidance and any dissent to influence.

Away from the economic calendar, however, Brexit chatter will also remain the key driver.

At the time of writing, the Pound was up by 0.10% to $1.3523.

Across the Pond

It’s a busy day ahead on the economic calendar. November building permits and housing starts are due out along with December Philly FED Manufacturing numbers. The key driver, however, will be the weekly jobless claims figures.

Away from the economic calendar, however, updates from stimulus talks on Capitol Hill will continue influence.

At the time of writing, the Dollar Spot Index was down by 0.31% to 90.170. Progress towards a stimulus packing and market reaction to the FED sank the Dollar early on.

For the Loonie

It’s a particularly quiet day ahead on the economic data front. There are no material stats to provide the Loonie with direction.

The lack of stats will leave COVID-19 news and stimulus talks on Capitol Hill in the spotlight.

At the time of writing, the Loonie was up by 0.04% to C$1.2738 against the U.S Dollar.

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

Economic Data, Brexit, Stimulus Talks, and the FED in Focus

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day.

For the Kiwi Dollar

3rd quarter current account figures were in focus in the early part of the day.

Year-on-year, the current account slid from a NZ$1.83bn surplus to a NZ$3.52bn deficit in the 3rd quarter. Economists had forecast a deficit of NZ$3.65bn. Quarter-on-quarter, the current account deficit narrowed from NZ$5.77bn to a deficit of NZ$2.55bn. Economists forecasted a deficit of NZ$2.57bn.

The Kiwi Dollar moved from $0.70912 to $0.70859 upon release of the figures. At the time of writing, the Kiwi Dollar was flat at $0.7088.

For the Japanese Yen

Trade data for November and prelim private sector PMI numbers for December were also in focus this morning.

In November, the trade surplus narrowed from ¥827.9bn to ¥366.8bn.  Economists had forecast a narrowing to ¥529.8bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 4.2%, following a 0.2% decline in October. Economists had forecast a 0.5% increase.
    • In November, exports to China rose by 3.8%, while exports to Asia fell by 4.3%.
    • There were also declines in exports to Australia (-2.2%), the U.S (-2.5%), and the EU (-1.2%).
  • Imports slumped by 11.1%, following a 13.3% slide in October. Economists had forecast a 10.5% decline.
    • In November, imports from China rose by 6.7%, with imports from Asia rising by 0.5%.
    • Imports from Australia (-23.4%), the U.S (-13.9%), and the EU (-16.4%) weighed, however.

The Japanese Yen moved from ¥103.643 to ¥103.589 upon release of the figures that preceded the private sector PMIs.

In December, the Services PMI fell from 47.8 to 47.2, while the Manufacturing PMI rose from 49.0 to 49.7. Economists had forecast PMIs of 48.5 and 50.0 respectively.

According to the December Markit Survey,

  • New orders across the manufacturing sector saw a weaker decline, while service-sector orders saw a steeper decline.
  • For manufacturers, the softer fall in new orders was the weakest in 2-years.
  • By contrast, however, new service sector export orders saw a weaker decline, while manufacturers saw a stronger decline.
  • As a result, employment across the services sector saw a stronger decline, while manufacturing firms increased payrolls.
  • Optimism across the private sector weakened at the end of the year.

The Japanese Yen moved from ¥103.649 to ¥103.665 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.03% to ¥103.70 against the U.S Dollar, while

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.13% to $0.7546.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Prelim private sector PMI numbers for France, Germany, and the Eurozone are due out later today.

Expect plenty of influence from the numbers, with the 2nd lockdown across EU member states likely to hit service sector activity.

Eurozone trade figures are also due out but would likely have a muted impact on the EUR.

Away from the economic calendar, Brexit and COVID-19 news updates will also need monitoring.

At the time of writing, the EUR was up by 0.02% to $1.2154.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Key stats include November inflation figures and prelim private sector PMI numbers for December.

Expect the services PMI to have the greatest impact on the day.

Away from the economic calendar, however, Brexit chatter will remain the key driver.

At the time of writing, the Pound was down by 0.16% to $1.3436.

Across the Pond

It’s a busy day ahead on the economic calendar. November retail sales figures are due out along with prelim private sector PMI numbers for December.

Expect the retail sales and services PMI numbers to have the greatest influence on the day.

Other stats due out include business inventory figures that should have a muted impact on the Dollar.

Away from the economic calendar, however, updates from stimulus talks on Capitol Hill will also influence.

At the time of writing, the Dollar Spot Index was up by 0.05% to 90.518.

For the Loonie

It’s a relatively busy day ahead on the economic data front. Key stats include November inflation and October wholesale sales figures.

Expect the inflation numbers to have the greatest influence.

At the time of writing, the Loonie was down by 0.06% to C$1.2708 against the U.S Dollar.

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

U.S Stats, COVID-19 News, and Updates from Capitol Hill in Focus

Earlier in the Day:

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

For the Kiwi Dollar

The Westpac Consumer Sentiment Index rose from 95.1 to 106.0 in the 4th quarter, inching close to the long-run average of 110.8. In the 3rd quarter, the Index had fallen from 97.2 to 95.1.

According to the 4th quarter survey,

  • Spending appetite improved markedly, with the “Good time to buy” sub-index rising from -2.5 to 7.0.
  • Consumers also had a more optimistic outlook on the economic outlook and expected financial situation.
  • The “expected financial situation” sub-index jumped from 1.8 to 13.0, to sit above the average of 11.4. More impressively, the 1-year economic outlook sub-index surged by 25.3 points to -1.0 to take it above the average -2.9.
  • Looking at the 5-year economic outlook, the sub-index climbed by 16.1 points to 26.0, falling shy of the average 28.8.

The Kiwi Dollar moved from $0.70808 to $0.70830 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7082.

For the Aussie Dollar

The RBA meeting minutes were in focus this morning.

Salient points from the minutes included:

International Economic Developments

  • While effective vaccines would reduce downside risks, infections continued to see marked increases in key economies.
  • Members noted that global economic activity had bounced back faster than anticipated in the September quarter. Tightening containment measures in the December quarter had resulted in a loss of economic momentum.
  • The imposition by Chinese authorities of import bans and other obstacles to importing some Australian products had also had an effect. It was noted, however, that Chinese demand for Australian iron ore remained firm.

Domestic Economic Developments

  • Members noted that the recovery had established reasonable momentum, supported by the lifting of restrictions in Victoria.
  • Expectations of GDP growth in the September and December quarters had been upgraded and employment had recovered faster than expected.
  • Significant spare capacity in the labor market and the economy more generally remained, however.
  • Members expected the economic recovery to still be uneven and protracted with inflation remaining low, nonetheless.

Considerations for Monetary Policy

  • Members noted that the global outlook remained uncertain.
  • Infection rates had risen sharply in Europe and the U.S, leading to a loss of momentum or even reversal in economic recoveries.
  • Vaccines should support the recovery, though the recovery is also dependent on ongoing fiscal and monetary policy support.
  • Consumer spending in Australia had risen as restrictions eased, with business and consumer confidence on the rise.
  • Employment had recovered strongly, with unemployment likely to fall below the 8% expected last month.
  • Given the outlook for both employment and inflation, members acknowledged that monetary and fiscal support will be required for some time.
  • The Board remains committed to not increasing the cash rate until actual inflation is sustainably within the 2-3% target range.
  • On this basis, the Board does not expect to increase the cash rate for at least 3-years.
  • Additionally, the Board remains of the view that it would be appropriate to remove the yield target before the cash rate increases.
  • Members agreed to keep the size of the bond purchase program under review and are prepared to do more if necessary.

The Aussie Dollar moved from $0.75410 to $0.75409 upon release of the minutes, which preceded economic data from China. At the time of writing, the Aussie Dollar was up by 0.01% to $0.7536.

From China

Industrial production, fixed asset investment, and retail sales for November were in focus.

  • Fixed asset investments rose by 2.6%, year-on-year, following a 1.80% rise in October. Economists had forecast a 2.6% rise.
  • Industrial production rose by 7.0%, following a 6.9% rise in October. Economists had forecast a 7.0% rise.
  • Retail sales rose by 5%, year-on-year, however, falling short of a forecasted 5.2% rise. In October, sales had risen by 4.3%.

The Aussie Dollar moved from $0.75356 to $0.75392 upon release of the data.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.02% to ¥104.07 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Finalized November inflation figures are due out of France and Italy.

Barring any marked revisions from prelims, however, we don’t expect the figures to have a material impact on the EUR.

COVID-19 news and further chatter on Brexit will influence.

At the time of writing, the EUR was up by 0.12% to $1.2159.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include November claimant count and October employment change and unemployment figures.

Wage growth figures for October are also due out but will likely have a muted impact on the day.

While the stats will influence ahead of Thursday’s BoE monetary policy decision, Brexit chatter will also remain in focus.

At the time of writing, the Pound was up by 0.11% to $1.3339.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. NY Empire State Manufacturing figures are due out along with industrial production and import and export price figures.

We would expect December’s NY Empire State and November’s industrial production figures to have the greatest influence.

Away from the economic calendar, however, updates from stimulus talks on Capitol Hill will influence.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.658.

For the Loonie

It’s a relatively busy day ahead on the economic data front. Key stats include November housing starts and October Manufacturing Sales figures.

Barring particularly dire numbers, however, the stats will likely have a muted impact on the Loonie.

The IEA’s monthly report, COVID-19 news updates, and chatter from Capitol Hill will be key drivers on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.2758 against the U.S Dollar.

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

Brexit, COVID-19, and Capitol Hill in Focus, with Economic Data on the Lighter Side

Earlier in the Day:

It’s was a relatively busy start to the week on the economic calendar this morning. The Japanese Yen was in action in the early hours.

For the Japanese Yen

Tankan survey figures were in focus ahead of finalized industrial production and tertiary industry activity figures due out later this morning.

  • All Big Industry CAPEX Index decreased by 1.2% in the 4th quarter. In the 3rd quarter, the CAPEX Index had increased by 1.4%. Economists had forecast a 0.1% decline.
  • Big Manufacturing Outlook Index rose from -17 to -8. In the 3rd quarter, the Index had risen from -27 to -17. Economists had forecast a rise to -11.
  • The Large Manufactures Index increased rose from -27 to -10. In the previous quarter, the index had increased from -34 to -27. Economists had forecast a rise to -15.
  • Large Non-Manufacturers Index rose from -12 to -5, coming in ahead of a forecasted -6. In the 3rd quarter, the index had increased from -17 to -12.

The Japanese Yen moved from ¥103.940 to ¥103.942 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥104.20 against the U.S Dollar

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.01% to $0.7534, with the Kiwi Dollar up by 0.06% to $0.7088.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. October industrial production figures for the Eurozone are due out later today.

Barring dire numbers, we don’t expect the figures to have a material impact on the EUR, however.

COVID-19 news and market reaction to the Sunday news on Brexit will influence in the day. Later in the day, the EUR could find support should lawmakers make progress towards a U.S stimulus package.

At the time of writing, the EUR was up by 0.11% to $1.2125, the early upside coming from the decision to extend Brexit talks.

For the Pound

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

That leaves the Pound in the hands of Brexit updates from the weekend and chatter in the day.

At the time of writing, the Pound was up by 0.59% to $1.3302, with the early surge coming from Sunday’s decision to extend talks.

Across the Pond

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

A lack of stats will leave the markets in the hands of stimulus talks and COVID-19 news updates.

At the time of writing, the Dollar Spot Index was down by 0.13% to $90.854.

For the Loonie

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

While there are no stats to consider, OPEC’s monthly report is due out this afternoon that will provide crude oil prices with direction. The focus will likely be on forecasts for demand, which remain at risk to a marked decline as global economic woes linger.

Away from the economic calendar, any positive news from Capitol Hill would support the Loonie late in the day.

At the time of writing, the Loonie was up by 0.08% to C$1.2759 against the U.S Dollar.

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

Brexit Update – Pound Jumps on an Agreement to Extend Talks

The Latest

Another Brexit deadline passed on Sunday, with negotiations set to continue. Boris Johnson and Ursula von der Leyen announced that it was “responsible to go the extra mile”.

Negotiations will now resume in Brussels. Britain and the EU have until the end of the year to reach an agreement. If both sides reach an agreement, the EU Parliament and the UK Parliament will then have to ratify any deal.

While the news delivered an early boost for the Pound, Boris Johnson continued to see a no-deal Brexit as the most likely outcome.

The Key Hurdles

The news from the weekend was Pound positive, in spite of Boris Johnson’s continued warning of the likelihood of a no-deal Brexit.

According to reports, both sides made progress on UK fisheries and on business competition. This is the so-called level playing field, with the EU adamant in protecting the single market.

A major hurdle remains, however, assuming that both sides close out an agreement on access to UK fisheries and business competition.

Britain has a hard stance with respect to falling under any EU rules and regulations. This leaves the policing of the Brexit agreement the main area of focus according to reports from the weekend.

From the market’s perspective, the very fact that talks are continuing beyond Sunday’s deadline is positive. The extension to talks suggests a willingness from both sides to avert a disorderly Brexit.

While Britain and the EU would face WTO trade terms, the EU would also lose all access to UK fisheries.

Late last week, the news wires had reported an increased British Navy presence to police British waters in the event of a no-deal outcome.

The Pound

At the time of writing, the Pound was up by 0.83% to $1.33297, reversing some of last week’s 1.61% slide.

After having avoided a slid to sub-$1.30 levels, the focus will remain on Brexit talks. Talks will need to reach a conclusion before the end of the transition period.

The markets will now need the news of progress to support the Pound. We can expect the markets to continue to brush aside the noise, however.

The 31st December deadline is a hard line in the sand for both sides. The deadline is not one that the two sides can shift with ease.

GBPUSD 141220 Daily Chart

Brexit Update – As the Weekend Nears, so does sub-$1.30 Levels for the Pound…

The Latest

No UK trade deal the most likely outcome. That’s quite a headline for the global financial markets to stomach.

On Wednesday, Boris Johnson and his chief negotiator Frost met with the EU President and Barnier.

A lack of progress and a new deadline was the upshot of the dinner meeting ahead of the EU Summit.

Thursday and Friday’s EU Summit had been the final deadline before Wednesday’s meeting.

As the week comes to a rapid end, the chances of a Brexit agreement have diminished rapidly. More importantly, few would want to be exposed to the unpredictability of weekend talks.

French President Macron spoke out today stating that the EU will stand firm on fishing quotas and other issues. Macron’s comments came off the back of the EU President announcing that a “no-deal” outcome was likely.

British PM Boris Johnson has also warned that there is a strong possibility of a no-deal unless the EU changes its stance on the remaining Brexit obstacles.

While there will be plenty of chatter from Brexiteers and “pro-Remainers”, reaching an agreement would have defied the odds.

Hindsight?

The EU was never going to cede and give Britain an edge. In fact, the EU had always looked to make it as unattractive as possible for any other member state to leave the EU.

Such a stance may well leave Britain without a deal. It will also bring chaos, not just to Britain, but to member states reliant on Britain, from an economic perspective.

As the dust settles, assuming that Macron does not eat his words between now and Sunday, the EU project may also come into doubt.

Not all EU member states have an interest in access to UK waters. Neither do all EU member states have any major concern over business competitiveness. With economic hardship hitting the EU and the global economy as a result of the COVID-19 pandemic, many will argue that now is not the time for another economic event.

Time will tell just who comes out worse off from Britain falling out of the EU without a deal. For Macron and the EU Establishment, they will be hoping for the British economy to implode. A prosperous Britain would certainly incentivize the likes of Portugal, Italy, Greece, and Spain. There is also the French Presidential Elections to think about next year. If French fishermen do lose access to UK fisheries, one can only imagine that Macron will bear the brunt of the fallout…

The Pound

At the time of writing, the Pound was down by 1.07% to $1.31454, following on from Thursday’s 0.81% decline.

In all reality, holding onto $1.30 levels before today’s close would be impressive should there be no progress towards a deal.

That would also make Monday a particularly interesting day for the Pound, which could sink to sub-$1.20 levels or surge through to $1.40 and beyond.

It will either be a flash crash or reprieve for a Pound that has been under the hammer since the 2016 Referendum. Before that, however, expect some more choppiness today.

Brexit and U.S Stimulus Updates Put the Pound and the Greenback in Focus

Earlier in the Day:

It’s was a quiet start to the week on the economic calendar this morning. The Kiwi Dollar was in action early on.

For the Kiwi Dollar

The Business PMI rose from 51.7 to 55.3 in November. In October, the PMI had fallen from 54.0 to 51.7.

The Kiwi Dollar moved from $0.70970 to $0.70991 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.06% to $0.7093.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.04% to ¥104.20 against the U.S Dollar, while the Aussie Dollar was down by 0.15% to $0.7524.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Finalized November inflation figures for Germany and Spain are due out later today.

The numbers are unlikely to have a material impact on the EUR, however.

Away from the economic calendar, Brexit will remain a key driver on the day, with day 2 of the EU Summit also likely to draw attention.

With foreign policy on the docket, Brexit may well be a talking point, while not on the Summit agenda.

At the time of writing, the EUR was up by 0.03% to $1.2142.

For the Pound

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

On the monetary policy front, BoE governor Bailey is scheduled to speak and could move the dial later today. With the BoE in action next week, any talk of negative rates would test support for the Pound.

With the Sunday Brexit deadline looming, however, updates from Brexit talks will remain the key driver on the day.

At the time of writing, the Pound was up by 0.05% to $1.3302.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. November wholesale inflation and prelim December consumer sentiment figures are due out.

While the wholesale inflation numbers will draw interest, the consumer sentiment figures will likely garner greater interest.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will continue to influence.

The Dollar Spot Index fell by 0.29% to 90.824 on Thursday.

For the Loonie

It’s another quiet day ahead on the economic data front. There are no material stats due out to provide the Loonie with direction. The lack of stats will continue to leave the Loonie in the hands of COVID-19 news updates and chatter from Capitol Hill.

At the time of writing, the Loonie was down by 0.03% to C$1.2743 against the U.S Dollar.

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

Brexit – Gaps Remain with a Sunday Deadline Now Looming

The Latest

On Wednesday, Boris Johnson and Britain’s chief negotiator Frost met with EU President Ursula von der Leyen and EU negotiator Barnier.

The initial meeting had been scheduled for just Boris Johnson and the EU President. Later in the day, however, both Frost and Barnier were invited.

Their inclusion had raised hopes of a more productive political dinner in Brussels. A return of hope towards a Brexit deal supported a 0.33% gain in the Pound on the day, which ended a run of 3 consecutive daily losses.

News from the meeting was less than positive, however.

Progress towards a Brexit deal was lacking, with a wide gap reportedly remaining on the 3 key obstacles to a trade agreement.

In spite of a lack of progress, both sides agreed to continue talks over the remainder of the week. This means that yet another EU summit will pass without a Brexit agreement.

The talk had been that today’s EU summit would be the deadline of deadlines. This has now slipped to Sunday, which is likely to be an unwavering deadline. Time has simply run out, with Britain’s transition period ending in just a few weeks.

The Brexit Hurdles

Boris Johnson’s election victory early this year had raised hope of an end to the Brexit saga.

9-months have now passed and Britain is barely any nearer to an agreement. Both the EU and Britain have stood firm on their positions vis-à-vis UK fisheries, competition, and policing.

With just 4 days until Sunday’s hard deadline, the markets will be looking for news of progress later today.

From Boris Johnson’s perspective, the stance remains simple. Britain cannot accept any terms that would continue to tie Britain to EU rules.

With French President Macron standing firm on the remaining issues, even German Chancellor Merkel took a stronger position, stating that unacceptable demands should not be accepted. In recent months, Merkel had looked to urge compromise before a recent speech by the EU President calling for the EU to protect the single market.

The Pound

At the time of writing, the Pound was down by 0.43% to $1.33388, reversing Wednesday’s gains.

With the EU Summit in focus today and Brexit talks to continue into the weekend, plenty of uncertainty remains.

When considering the chances of a no-Deal Brexit and BoE Governor Bailey’s view of a no-deal Brexit impact on the economy, a large degree of hope remains priced in.

Updates from today’s EU Summit and Brexit talks today and tomorrow will be key for the Pound.

A lack of progress by late Friday would likely test support for the Pound at current levels. That’s assuming that the Pound doesn’t take a hit later today…

GBPUSD 101220 Daily Chart

The ECB, the EU Summit and Capitol Hill Put the EUR, the Pound, and the USD in Focus

Earlier in the Day:

It’s was a relatively busy start to the week on the economic calendar this morning. The Kiwi Dollar, Japanese Yen, and the British Pound were in action early on.

For the Kiwi Dollar

Electronic card retail sales were in focus in the early hours. In November, electronic card retail sales rose by 0.1%, following an 8.8% jump in October.

Compared with November 2019, total card retail spending rose by 1.4%.

According to NZ Stats,

  • Spending on hospitality (-9.3%) and fuel (-17%) dragged on the headline figure.
  • There were solid increases across the rest of the industries, however.
  • Spending on durables rose by 8.5%, with spending on consumables and apparel rising by 5.3% and by 4.3% respectively.
  • There was also a 5.6% increase in spending on motor vehicles (excl. fuel).

The Kiwi Dollar moved from $0.70232 to $0.70153 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.10% to $0.7014.

For the Japanese Yen

The BSI Large Manufacturing Conditions Index rose from 0.1 to 21.6 in the 4th quarter. In the 3rd quarter, the index had risen from -52.3 to 0.1.

The Japanese Yen moved from ¥104.276 to ¥104.282 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.03% to ¥104.26 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.04% to $0.7444.

The Day Ahead:

For the EUR

It’s a quiet but important day ahead on the economic calendar. While there are no material stats due out to provide the EUR with direction, the ECB is in action later today.

The promise of support has been made, as the Eurozone economy struggles amidst the 2nd wave of the COVID-19 pandemic.

With the markets expecting further easing, the ECB Press Conference will garner plenty of interest.

Away from the economic calendar, COVID-19 and Brexit news updates will also be in focus.

At the time of writing, the EUR was up by 0.01% to $1.2082.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include October industrial and manufacturing production, trade, and GDP figures. Expect the manufacturing production and GDP figures to have the greatest impact.

With the EU Summit due to take place later today, however, Brexit will be the main area of focus on the day. A lack of concrete progress from Wednesday’s meeting weighed on the Pound early on.

At the time of writing, the Pound was down by 0.10% to $1.3385.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. November inflation and the weekly jobless claims figures are due out.

While the inflation numbers will draw interest, expect the weekly claims figures to have a greater influence on the Dollar and market risk sentiment.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will continue to influence.

At the time of writing, the Dollar Spot Index was down by 0.05% to 91.042.

For the Loonie

It’s a quiet day ahead on the economic data front. There are no material stats due out to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of COVID-19 news updates and chatter from Capitol Hill.

At the time of writing, the Loonie was down by 0.02% to C$1.2819 against the U.S Dollar.

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

Brexit – Hope Returns as Boris Heads for Brussels

The Latest

After the doom and gloom from the weekend and continued lack of progress, a glimmer of hope returned to the Brexit table.

British Prime Minister Boris Johnson and EU President Ursula von der Leyen held a call earlier in the week that ended in an agreement for a face-to-face.

Today the British Prime Minister heads to Brussels with the hopes of a Brexit deal riding on today’s visit.

Until now, European and British negotiators have failed to close the gap on the three key issues. These have ultimately been the main areas of contention throughout the year.

The fact that neither side has shown any desire or willingness to yield raised the prospects of a no-deal Brexit on Monday.

We saw the Pound see red for 3 consecutive days, culminating in a current week low of $1.32238 before support kicked in.

The Brexit Hurdles

For Boris Johnson and Ursula von der Leyen, the main areas of focus will be UK fisheries, business competition rules, and how any Brexit deal would be policed.

As far as the Brexiteers are concerned, leaving the EU means prising Britain away from the rules of the European Union. The EU sees this differently, however, particularly with regards to business competition rules and the policing of any deal.

A trade agreement hangs in the balance and, while Britain wants to be free of the EU’s chains, the need for a trade agreement suggests that some strings will need to be attached to any agreement.

Earlier in the summer, there was also the introduction of the Internal Market Bill that caused much clamor on both sides of La Manche.

Even the President-Elect made his feelings known ahead of the Presidential Election.

This week, Johnson has announced a willingness to remove contentious clauses that were seen to jeopardize the Good Friday Agreement.

The move should not only smooth things over ahead of today’s meeting but also with the incoming U.S administration. Assuming Johnson goes ahead with the amendments to the Bill, it would also put a U.K – U.S trade agreement back on the table.

The Pound

At the time of writing, the Pound was up by 0.20% to $1.33775. While eyeing a 1st daily gain in 4, much will depend on Boris Johnson’s business dinner with the EU President.

For the Pound, a positive outcome to the meeting will be needed to support current levels. While the markets are not expecting a Brexit deal from the dinner, the meeting will need to pave a way forward. This would then allow for negotiators to resume talks in the coming days.

A failure to pave a way forward and tomorrow’s EU Summit could spell the end of talks and leave Britain without a deal.

Such an outcome would certainly sink the Pound and weigh on the European equity markets.

There could be one last chance of a deal, however. EU member states will likely press for compromise at the Summit should today’s meeting fail to bear fruit.

Compromising on UK fisheries may not be enough, however, when considering what else is at stake. The last thing the EU needs is a competitive Britain that looks to jeopardize the EU Single Market…

Whatever happens, expect plenty of volatility, with uncertainty and hope likely to grapple for position.

GBPUSD 091220 Daily Chart

The BoC Puts the Loonie in Focus, while Brexit Keeps the Pound in the Spotlight

Earlier in the Day:

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

For the Aussie Dollar

The Westpac Consumer Sentiment Index rose by 4.1% to 112.0 in December. In November, the index had risen by 2.5% to 107.7.

According to the latest Westpac Report,

  • The rebound continued in December, with the Index now sitting 48% above April’s low to reach its highest level since October 2010.

Looking at the Index components:

  • Family finances vs a year ago rose by 6.9% to 96.1, while finances next 12-months fell by 1.8% to 108.9. Both held above their respective averages of 89.2 and 107.4.
  • Economic conditions next 12-months rose by 9.9% to 111.9, with economic conditions next 5-years climbing by 5.9% to 112.1. Both sat above their respective averages of 90.7 and 91.4.
  • Time to buy a major household item rose by 0.7% to 122.2, coming up short of the long-run average of 126.7.
  • In spite of a 5.9% fall in the time to buy a dwelling index, it remained above a long-run average of 119.3.
  • The Unemployment Expectations Index slid by 16.2% to 106.3, pulling further back from a long-run average of 130.2.

The Aussie Dollar moved from $0.74131 to $0.74066 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.07% to $0.7415.

Out of China

November inflation figures were in focus.

Inflationary pressures vanished in November, with consumer prices falling by 0.5%, year-on-year, reversing a 0.5% rise in October. Economists had forecast a 0.8% rise. In the month of November, consumer prices slid by 0.6%, following a 0.3% decline in October. Economists had forecast a 0.2% fall.

Wholesale deflationary pressures eased in November, however. The Producer Price index fell by 1.50%, year-on-year, after having fallen by 2.1% in October. Economists had forecast a 1.80% fall.

The Aussie Dollar moved from $0.74130 to $0.74136 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.02% to ¥104.14 against the U.S Dollar, with the Kiwi Dollar flat at $0.7042.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. German trade data is due out in the early part of the European session.

The numbers are unlikely to have a material impact on the EUR, however, with Brexit in focus.

At the time of writing, the EUR was up by 0.05% to $1.2110.

For the Pound

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

The lack of stats will continue to leave the Pound in the hands of Brexit updates.

British Prime Minister Boris Johnson is due to meet EU President Ursula von der Leyen today in Brussels. With the British PM willing to remove contentious clauses from the Internal Market Bill, hopes of a deal remain.

Expect plenty of Pound sensitivity to updates from today’s talks, with the EU Summit looming large.

At the time of writing, the Pound was up by 0.10% to $1.3368.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. JOLTs job openings for October are due out later today.

Barring dire numbers, the markets will likely brush aside the figures, however. The market focus will be on COVID-19 vaccine news, updates from Capitol Hill on stimulus, and Brexit. Expect any further chatter on China sanctions to also influence.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.914.

For the Loonie

It’s a quiet but important day ahead on the economic data front. While there are no material stats due out to provide the Loonie with direction, the BoC is in action later today.

Progress towards a COVID-19 vaccine rollout and rising crude oil prices, together with upbeat economic data should prevent any moves. The markets will be looking for some forward guidance, however, with downside risks lingering.

At the time of writing, the Loonie was up by 0.04% to C$1.2814 against the U.S Dollar.

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