Another Quiet Day on the Economic Calendar Leaves the FED and Risk Sentiment in the Driving Seat

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning, with the China markets closed today. The Kiwi Dollar was in action in the early hours, however.

Later this morning, the RBA meeting minutes will also draw interest as the markets look to assess the impact of the latest lockdown measures on policy.

For the Kiwi Dollar

Consumer sentiment figures were in focus.

In the 3rd quarter, the Westpac Consumer Sentiment Index fell from 107.1 to 102.7.

According to the Westpac survey,

  • Confidence took a hit, with the index falling by 4.4 points as a result of the latest nationwide lockdown.
  • The decline was more modest, however, than the fall seen back in 2020.
  • While households remain secure about their personal financial situation, global supply chain disruption weighed on spending appetites.

The sub-components:

  • The Present Conditions Index fell by 2.7 points to 95.6, with the Expected Conditions Index down 5.5 points to 107.4.
  • 1-year economic outlook tumbled by 10.0 points to -5.6, with the “Good time to buy” sub-index falling by 7.2 points to -5.2.
  • 5-year economic outlook fell by 6.2 points to 11.5, while the current financial situation sub-index rose by 1.8 points to -3.6.
  • Expected financial situation saw a modest 0.6 point decline to 16.1.

The Kiwi Dollar moved from $0.70293 to $0.70260 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.26% to $0.7009.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥109.390 against the U.S Dollar, with the Aussie Dollar up by 0.06% to $0.7256.

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.

The lack of stats will leave the EUR in the hands of market risk appetite and sentiment towards FED monetary policy.

At the time of writing, the EUR was flat at $1.1726.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. CBI Industrial Trend Orders for September are due out later today. With little else for the markets to consider, we can expect influence. The impact will be limited, however, with the Pound on the defensive ahead of Thursday’s policy decision.

At the time of writing, the Pound was up by 0.01% to $1.3658.

Across the Pond

It’s also a relatively quiet day ahead. Housing sector numbers for August are due out later in the day. With the markets focused on the FED, however, the stats are unlikely to have an impact on the day.

On Monday, the U.S Dollar Spot Index rose by 0.09% to end the day at $93.276.

For the Loonie

It’s a quiet day ahead for the Loonie. House price figures for August are due out later in the day.

We don’t expect the numbers to provide the Loonie with direction, however. Market risk sentiment will and crude oil prices will remain the key drivers on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.2815 against the U.S Dollar.

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

Analysis: Why the Fed Might Welcome a Bond Market Tantrum

Persistently low yields are a feature of bond markets across the developed world, with central banks mostly in no hurry to raise interest rates and a global savings glut that keeps debt securities in constant demand.

But it is in the United States that the contradiction between economic recovery and bond yields is starkest.

Even with growth tipped to surpass 6% this year and a “taper” in sight for the Fed’s bond-buying programme at the end of this year, 10-year yields are still stuck at just above 1.3%..

The Fed probably rejoiced at low yields in the initial stages of the economic recovery, but now needs bonds to respond to the end of pandemic-linked recession, said Padhraic Garvey, head of research for the Americas at ING Bank.

Current pricing, analysts say, looks more consistent with heightened economic uncertainty, whereas higher yields would align markets more with the signals coming from central banks.

“To facilitate that, we argue that there needs to be a tantrum. If the Fed has a taper announcement … and there is no tantrum at all, that in fact is a problem for the Fed,” ING’s Garvey said.

Analysts say a bond market tantrum would involve yields rising 75-100 basis points (bps) within a couple of months.

The original “taper tantrum” in 2013 boosted U.S. yields just over 100 bps in the four months after then Fed boss Ben Bernanke hinted at an unwinding of stimulus measures.

But that kind of sudden jump in yields looks unlikely right now, given how clearly the Fed has telegraphed its plans to taper its bond-buying. And as 2013 showed, bond market tantrums carry nasty side-effects including equity sell-offs and higher borrowing costs worldwide.

A happy medium, analysts say, might be for benchmark yields to rise 30-40 bps to 1.6-1.8%

FED AND BANKS NEED AMMUNITION

Besides wanting higher yields to better reflect the pace of economic growth, the Fed also needs to recoup some ammunition to counter future economic reversals.

The Fed funds rate – the overnight rate which guides U.S. borrowing costs – is at zero to 0.25%, and U.S. policymakers, unlike the Bank of Japan and the European Central Bank, are disinclined to take interest rates negative.

The Fed won’t want to find itself in the position of the ECB and BOJ, whose stimulus options at the moment are limited to cutting rates further into negative territory or buying more bonds to underwrite government spending.

Jim Leaviss, chief investment officer at M&G Investments for public fixed income, said policymakers would probably like the Fed fund rate to be at 2%, “so, when we end up in the next downturn, the Fed will have some space to cut interest rates without hitting the lower bound of zero quickly”.

Another reason higher yields might be welcomed is because banks would like steeper yield curves to boost the attractiveness of making longer-term loans funded with short-term borrowing from depositors or markets.

Thomas Costerg, senior economist at Pictet Wealth Management, notes that the gap between the Fed funds rate and 10-year yields of about 125 bps now is well below the average 200 bps seen during previous peaks in economic expansion.

He believes the Fed would favour a 200 bps yield slope, “not only because it would validate their view that the economic cycle is fine but also because a slope of 200 bps is healthy for the banking sector’s maturity transformation.”

GRAVITATIONAL FORCE

But even a tantrum might not bring a lasting rise in yields.

First, while the Fed may look with envy at Norway and New Zealand where yields have risen in expectation of rate rises, it has stressed that its own official rates won’t rise for a while.

Structural factors are at play too, not least global demand for the only large AAA-rated bond market with positive yields.

The Fed also, in theory at least, guides rates towards the natural rate of interest, the level where full employment coincides with stable inflation.

But this rate has shrunk steadily. Adjusted for projected inflation, the “longer-run” funds rate – the Fed’s proxy for the natural rate – has fallen to 0.5% from 2.4% in 2007. If correct, it leaves the Fed with little leeway.

Demographics and slower trend growth are cited as reasons for the decline in the natural rate though a paper https://bit.ly/3nVMxMv presented last month at the Jackson Hole symposium also blamed a rise in income inequality since the 1980s.

The paper said the rich, who are more likely to save, were taking a bigger slice of overall income and the resulting savings glut was weighing on the natural rate of interest.

“One lesson from this year is that there is massive gravitational force, a price-insensitive demand which is pressing down on Treasury yields,” Pictet’s Costerg said.

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

(Reporting by Stefano Rebaudo; Additional reporting by Dhara Ranasinghe in London and Dan Burns in New York; Editing by Sujata Rao and David Clarke)

 

A Quiet Economic Calendar Leaves the Dollar in the Spotlight

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. With the China and Japan markets closed today, there were no material stats for the markets to consider in the early hours.

The lack of stats left the markets to respond to moves through the U.S session on Friday, which had left riskier assets in the red.

For the Majors

At the time of writing, the Japanese Yen was down by 0.05% to ¥109.990 against the U.S Dollar, with the Aussie Dollar down by 0.25% to $0.7261. The Kiwi Dollar was down by 0.17% to $0.7028.

The Day Ahead

For the EUR

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

Barring a marked spike, however, we don’t expect the August figures to have a material impact on the EUR.

At the time of writing, the EUR was down by 0.01% to $1.1724.

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.

The lack of stats will leave the Pound in the hands of market risk sentiment as the markets look ahead to Thursday’s MPC decision.

At the time of writing, the Pound was down by 0.12% to $1.3725.

Across the Pond

It’s also particularly quiet day ahead. There are no material stats due out to provide the Dollar and the broader markets with direction.

The lack of stats will leave the markets to continue to focus on the FOMC and what to expect on Wednesday.

The U.S Dollar Spot Index ended Friday up 0.28% to $93.195.

For the Loonie

It’s a particularly quiet day ahead for the Loonie, however. There are no major stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil prices and market risk sentiment.

At the time of writing, the Loonie was down by 0.06% to C$1.2774 against the U.S Dollar.

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

NZD/USD Forex Technical Analysis – Sellers Targeting .6988 – .6945 Retracement Zone

The New Zealand Dollar was pressured on Friday despite strong bets for a Reserve Bank of New Zealand rate hike on October 6. The price action reflects a stronger U.S. Dollar that was driven higher on Friday by better-than-forecast U.S. retail sales data released on Thursday that backed expectations for a reduction of asset purchases by the Federal Reserve before the end of the year.

On Friday, the NZD/USD settled at .7034, down 0.0039 or -0.55%.

The Fed holds a two-day monetary policy meeting on September 21-22 and is expected to open discussions on reducing its monthly bond purchases, while tying any actual change to U.S. job growth in September and beyond.

Daily NZD/USD

 Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7157 will change the main trend to up.

The minor trend is also down. A trade through .7137 will change the minor trend to up. This will also shift momentum to the upside.

The main range is .7316 to .6806. The NZD/USD is currently trading on the weak side of its retracement zone at .7061 to .7121, making this area resistance.

The long-term support zone is .7027 to .6924. The NZD/USD is currently testing the upper or 50% level of this zone.

The minor range is .6806 to .7170. Its retracement zone at .6988 to .6945 is the next target area. This zone falls inside the long-term zone.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD early Monday is likely to be determined by trader reaction to the main 50% level at .7027.

Bullish Scenario

A sustained move over .7027 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the 50% level at .7061. Since the main trend is down, look for sellers on the first test. Overcoming this level will extend the rally.

Bearish Scenario

A sustained move under .7027 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the retracement zone at .6988 to .6945.

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

The Week Ahead – Central Banks back in Focus with the BoE and the FED in Action

On the Macro

It’s a quiet week ahead on the economic calendar, with 37 stats in focus in the week ending 17th September. In the week prior, 62 stats had also been in focus.

For the Dollar:

Prelim private sector PMIs for September will be in focus on Thursday.

Expect the services PMI to be the key stat of the week.

Other stats include housing sector data that will likely have a muted impact on the Dollar and the broader market.

The main event of the week, however, is the FOMC monetary policy decision on Wednesday.

With the markets expecting the FED to stand pat, the economic and interest rate projections and press conference will be pivotal. FED Chair Powell prepped the markets for the tapering to begin this year. The markets are not expecting any hint of a shift in policy on interest rates, however…

In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195.

For the EUR:

It’s a relatively busy week on the economic data front.

Prelim September private sector PMIs for France, Germany, and the Eurozone will draw plenty of interest on Thursday.

While Germany’s manufacturing PMI is key, expect influence from the entire data set. Market concerns over the economic recovery have tested support for riskier assets. Softer PMI numbers would test EUR support on the day.

For the week, the EUR fell by 0.75% to $1.1725.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

On the economic data front, CBI Industrial Trend Orders and prelim private sector PMIs are due out.

Expect the services PMI for September to be the key stat on Thursday.

While the stats will influence, the BoE’s monetary policy decision on Thursday will be the main event.

Persistent inflationary pressure has raised the prospects of a sooner rather than later move by the BoE. Weak retail sales figures have made things less clear, however.

Expect any dissent to drive the Pound towards $1.40 levels.

The Pound ended the week down by 0.71% to $1.3741.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Early in the week, house price figures for August are due out. The numbers are not expected to have a material impact on the Loonie, however.

Retail sales figures for July, due out on Thursday, will influence, however. Another sharp increase in spending would deliver the Loonie with much-needed support.

The Loonie ended the week down 0.57% to C$1.2764 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no major stats to provide the Aussie Dollar with direction.

While there are no major stats, the RBA monetary policy meeting minutes on Tuesday will influence. The markets will be looking for forward guidance following the latest lockdown measures.

The Aussie Dollar ended the week down by 1.05% to $0.7279.

For the Kiwi Dollar:

It’s another quiet week ahead.

Early in the week, consumer sentiment figures for the 3rd quarter will be in focus.

Trade data, due out on Friday, will be the key numbers for the week, however.

Away from the economic calendar, however, COVID-19 news updates will also be key.

The Kiwi Dollar ended the week down by 1.03% to $0.7040.

For the Japanese Yen:

It’s a relatively busy week on the economic calendar.

Inflation and prelim private sector PMIs are due out on Friday. We don’t expect the numbers to influence the Yen, however.

On the monetary policy front, the BoJ is in action on Wednesday. We aren’t expecting any surprises, however, as the Delta variant continues to deliver economic uncertainty.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar.

Out of China

There are also no major stats due out of China for the markets to consider, with the Chinese markets closed early in the week.

On the monetary policy front, the PBoC is in action. We don’t expect any changes to the Loan Prime Rates, however.

The Chinese Yuan ended the week down by 0.34% to CNY6.4661 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia remain the main areas of interest for the markets. News updates from the Middle East, in particular, will need continued monitoring following recent events in Afghanistan.

The Weekly Wrap – Economic Data and Policy Jitters Delivered a Boost for the Greenback

The Stats

It was a busier week on the economic calendar, in the week ending 17th September.

A total of 61 stats were monitored, which was up from 42 stats in the week prior.

Of the 61 stats, 21 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 30 reflected a deterioration from previous.

For the Greenback, upbeat economic data and sentiment towards monetary policy delivered support in the week. In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195. In the previous week, the Dollar had risen by 0.59% to 92.582.

Out of the U.S

Early in the week, inflation figures were in focus.

In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.

Mid-week, industrial production and NY Empire State manufacturing figures were market positive.

On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.

In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.

Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.

Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.

At the end of the week, consumer sentiment improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.

Out of the UK

It was also a busy week. Employment, inflation, and retail sales figures were in focus. The stats were skewed to the positive.

In August, claimant counts fell by a further 58.6k after having fallen by 48.9k in July. In July, the unemployment rate fell from 4.7% to 4.6%.

The UK’s annual rate of inflation accelerated from 2.0% to 3.25 in August, also delivering Pound support.

At the end of the week, retail sales disappointed, however. Month-on-month, core retail sales fell by 1.2% in August, following a 3.2% slide in July. Retail sales fell by 0.9% after having fallen by 2.8% in July. Economists had forecast a pickup in spending.

In the week, the Pound fell by 0.71% to end the week at $1.3741. In the week prior, the Pound had fallen by 0.23% to $1.3839.

The FTSE100 ended the week down by 0.93%, following a 1.53% loss from the previous week.

Out of the Eurozone

Economic data included wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.

Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the EUR.

In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.

Industrial production and trade data were positive, however.

Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.

At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.

For the week, the EUR fell by 0.75% to $1.1725. In the week prior, the EUR had fallen by 0.56% to $1.1814.

The CAC40 slid by 1.40%, with the DAX30 and the EuroStoxx600 ending the week with losses of 0.77% and 0.96% respectively.

For the Loonie

Economic data included manufacturing sales, inflation, and wholesale sales figures.

The stats were mixed in the week.

In July, both manufacturing sales and wholesale sales disappointed with falls of 1.5% and 2.1% respectively.

Providing support, however, was a pickup in the annual rate of inflation from 3.3% to 3.5%.

The pickup in inflationary pressure and rising oil prices were not enough to support the Loonie against the Greenback.

In the week ending 17th September, the Loonie fell by 0.57% to C$1.2764. In the week prior, the Loonie had fallen by 1.34% to C$1.2692.

Elsewhere

It was another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 1.05% to $0.7279, with the Kiwi Dollar ending the week down by 1.03% to $0.7040.

For the Aussie Dollar

Business and consumer confidence figures were in focus in the 1st half of the week.

In spite of the latest lockdown measures, the stats were skewed to the positive.

The NAB Business Confidence Index rose from -8 to -5 in August.

More significantly, the Westpac Consumer Sentiment Index increased by 2.0% in September. The index had fallen by 4.4% in August.

On Thursday, employment figures disappointed, however.

In August, full employment fell by 68k following a 4.2k decline in July. Employment tumbled by 146.3k, however, versus a forecasted 90.0k decline. In July, employment had risen by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate declining from 66.0% to 65.2%.
  • Year-on-year, the number of unemployed was down by 298,000.

For the Kiwi Dollar

It was also a mixed week on the economic data front.

2nd quarter GDP numbers impressed, with the NZ economy expanding by 2.8%, quarter-on-quarter. The economy had expanded by a more modest 1.4% in the previous quarter.

On the negative, however, was a slide in the Business PMI from 62.6 to 40.1 in August. The figures reflected the impact of the latest lockdown measures on production, justifying the RBNZ’s decision to leave the cash rate unchanged.

For the Japanese Yen

It was a relatively quiet week, with the numbers skewed to the negative.

According to finalized figures, industrial production fell by 1.5% in July. While in line with prelim figures, this was a partial reversal of a 6.5% jump from June.

In August, Japan’s trade balance fell from a ¥439.4bn surplus to a ¥635.4bn deficit. Exports rose by 26.2%, year-on-year, after having been up by 37% in July.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar. In the week prior, the Yen had fallen by 0.21% to ¥109.94.

Out of China

Fixed asset investment and industrial production figures were in focus mid-week.

There were yet more disappointing numbers from China for the markets to consider.

In August, fixed asset investment increased by 8.9%, year-on-year. This was softer than a 10.3% increase in July.

More significantly, industrial production was up by 5.3% in August versus 6.4% in July.

In the week ending 17th September, the Chinese Yuan fell by 0.34% to CNY6.4661. In the week prior, the Yuan had ended the week up by 0.18% to CNY6.4443.

The CSI300 and the Hang Seng ended the week down by 3.14% and by 4.90% respectively.

Dollar Touches Three-Week High, Lifted by Recent Data, Fed Taper View

The dollar index, a gauge of the greenback’s value against six major currencies, rose to 93.220, the highest since the third week of August. It was last up 0.4% at 93.207.

For the week, the dollar index gained 0.6%, its largest weekly percentage rise since mid-August.

The Fed holds a two-day monetary policy meeting next week and is expected to open discussions on reducing its monthly bond purchases, while tying any actual change to U.S. job growth in September and beyond.

“While we doubt that the FOMC will set out a plan for tapering its asset purchases, the new economic projections may shed some light on its reaction function given building cyclical inflationary pressures,” wrote Jonathan Petersen, markets economist at Capital Economics, in its latest research note.

“Our view remains that inflation in the U.S. will stay elevated for longer than the FOMC and investors currently anticipate, in turn supporting higher U.S. yields and a stronger dollar,” he added.

Speculation about a Fed taper this year gathered pace after U.S. retail sales unexpectedly increased in August, data showed on Thursday, rising 0.7% from the previous month despite expectations of a 0.8% fall. A business sentiment survey also showed a big improvement.

In afternoon New York trading, the euro slid 0.3% to $1.1729, after hitting a three-week low of $1.1724 earlier in the session.

The University of Michigan consumer sentiment for September inched higher to 71 versus the final August reading of 70.3, but overall analysts said the rise was nowhere near the improvements seen in the Empire States and Philadelphia Fed manufacturing surveys.

The dollar held gains after the Michigan sentiment report.

Currency markets were generally quiet on Friday with traders reluctant to take on new positions ahead of a clutch of important central bank meetings next week including the Fed, the Bank of Japan and the Bank of England.

The dollar was up 0.5% against the Swiss franc at 0.9320 francs, after earlier hitting a five-month high of 0.9324 francs .

The dollar rose 0.2% to 109.92 yen.

The yen has shown limited reaction to the ruling Liberal Democratic Party’s leadership race, which formally kicks off on Friday ahead of a Sept. 29 vote. The LDP’s parliamentary dominance means the party’s new leader will become prime minister.

The dollar also rose to a two-week high against the offshore yuan and was last up 0.3% at 6.4711. The yuan is being pressured by growing worries about China’s real estate sector as investors fear property giant China Evergrande could default on its coupon payment next week.

The British pound fell 0.4% to $1.3738 as UK retail sales undershot expectations. However, with investors bringing forward forecasts for a Bank of England interest rate hike to mid-2022, sterling remains supported.

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

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Muralikumar Anantharaman, Alex Richardson and Sonya Hepinstall)

UK Retail Sales Puts the Pound in the Spotlight

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. The Kiwi Dollar was back in action this morning.

For the Kiwi Dollar

Business PMI figures were in focus in the early hours.

In August, the Business PMI tumbled from 62.6 to 40.1. The PMI had risen from 60.7 to 62.6 in July.

According to the August survey,

  • Down by 22.1 points from July, the PMI avoided a fall to sub-30 levels seen amidst the level 4 lockdown of 2020.
  • The production sub-index took the biggest hit, slumping from 63.9 to 27.7.
  • New orders fell from 63.7 to 44.4, with deliveries and finished stocks also falling below the 50 mark.
  • By contrast, the employment sub-index saw a more modest fall from 57.9 to 54.5.

The Kiwi Dollar moved from $0.70726 to $0.70715 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.01% to $0.7074.

Elsewhere

At the time of writing, the Japanese Yen was flat at ¥109.730 against the U.S Dollar, while the Aussie Dollar was up by 0.04% to $0.7295.

The Day Ahead

For the EUR

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

With little else for the markets to consider, expect any upward revisions to influence the EUR.

At the time of writing, the EUR was down by 0.02% to $1.1765.

For the Pound

It’s a busy day ahead on the economic calendar. Retail sales figures for August are due out later this morning.

With the markets looking ahead to next week’s BoE monetary policy decision, we can expect Pound sensitivity to the numbers.

Following a pickup in inflationary pressure and better than expected employment figures, positive numbers would suggest a more hawkish MPC.

At the time of writing, the Pound was up by 0.02% to $1.3798.

Across the Pond

It’s a relatively quiet day ahead. Michigan consumer sentiment and expectation figures are due out later today.

With market sensitivity to consumer sentiment heighted as a result of the Delta variant, expect the numbers to influence market risk sentiment.

The U.S Dollar Spot Index ended Thursday up 0.41% to $92.932.

For the Loonie

It’s a particularly quiet day ahead for the Loonie, however. There are no major stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil prices and market risk sentiment.

At the time of writing, the Loonie was up by 0.02% to C$1.2681 against the U.S Dollar.

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

Dollar Index Climbs After U.S. Retail Sales Show Surprise Rebound

The dollar index, which measures the U.S. currency against six others, added to gains following the report and was last up 0.5% at 92.866. It hit its highest level since Aug. 27.

Retail sales rose 0.7% last month, boosted in part by back-to-school shopping and child tax credit payments, while data for July was revised down.

A separate report showed U.S. initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 332,000 for the week ended Sept. 11. Economists had forecast 330,000 applications for the latest week.

“If you look at the retail sales number, it’s quite constructive even with the revisions, so we are seeing the dollar benefit from that, particularly against the funding currencies like the euro, Swiss and the yen,” said Bipan Rai, North American head of FX strategy for CIBC Capital Markets in Toronto.

The news could bolster investor expectations for next week’s Federal Reserve policy meeting and how soon the U.S central bank will start to taper stimulus.

“It feels like whatever lingering concerns there were with the underlying economy … that was kind of washed away a little bit. So as we move towards the Fed next week, the evidence backs up the idea that we’re going to get a taper signal from the Fed at the meeting,” he said.

On Tuesday, the dollar index fell to a one-week low of 92.321 after a softer-than-expected inflation report. Its low for the month was 91.941, on Sept. 3, when payrolls data disappointed.

Investors are looking for clarity on the outlook for both tapering and interest rates at the Fed’s two-day policy meeting that ends next Wednesday.

Tapering typically lifts the dollar as it suggests the Fed is one step closer to tighter monetary policy.

It also means the central bank will be buying fewer debt assets, in effect reducing the amount of dollars in circulation, which in turn lifts the currency’s value.

The dollar also gained 0.3% to 109.70 yen , after sliding to a six-week low of 109.110 in the previous session.

The euro was 0.4% lower at $1.1766.

The Swiss franc also fell against the dollar and was last at 0.9263 franc per dollar.

Elsewhere, the Australian dollar was down 0.5% at $0.7296.

Earlier, data showed the country’s jobless rate unexpectedly fell to 4.5%, but the statistics bureau said the change reflected a drop in the participation rate rather than a strengthening of the labor market.

In cryptocurrencies, moves in bitcoin were relatively subdued. It was last down 0.9% at $47,711. Ether changed hands at $3,589, down 0.7%.

AMC Entertainment Holdings Inc boss Adam Aron said in a tweet this week that the theater chain would accept ether, bitcoin cash and litecoin alongside bitcoin for ticket purchases.

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

(Reporting by Caroline Valetkevitch; Additional reporting by Ritvik Carvalho in London and Kevin Buckland in Tokyo; Editing by Alexander Smith, Mark Potter and Jonathan Oatis)

 

AUD/USD and NZD/USD Fundamental Daily Forecast –Aussie Lower Amid Weaker-Than-Expected Employment Change Data

The Australian Dollar is trading lower on Thursday after giving back earlier gains. The previous session, the Aussie touched its lowest level since August 31 before rebounding into the close.

The catalyst behind the price action on Wednesday was the weaker U.S. Dollar. It was pressured by uncertainty as traders looked to next week’s Federal Reserve policy meeting for indications on how soon the U.S. central bank will start to taper stimulus.

At 09:43 GMT, the AUD/USD is trading .7315, down 0.0019 or -0.26%.

Also weighing on the Australian Dollar were lower Dalian iron ore prices, which slumped to a new low for the year.

Traders were also unimpressed by the country’s mixed labor market report for July. The employment change fell more than expected, but the unemployment rate unexpectedly fell sharply. Nonetheless, traders dismissed the drop in the jobless rate after the statistics bureau said the change reflected a drop in the participation rate rather than a strengthening of the labor market.

China Iron Ore Futures Plunge to Over 9-Month Low on Falling Steel Output

Iron ore futures in China hit a nine-month low on Wednesday as steel output in the top producer continued to slide, compounding concerns around demand for the raw material.

China’s monthly crude steel production slipped for the third straight month to 83.24 million tonnes in August, data from the National Bureau of Statistics showed, sending average daily output to the lowest since March 2020.

The drop in iron ore prices may be capping gains in the Australian Dollar.

Australian Employment Slides in August as lockdowns Slash Workers’ Hours

Australian employment dived in August as coronavirus lockdowns in Sydney and Melbourne forced businesses to lay off workers and slash hours, while the jobless rate was nudged lower by a sharp fall in the number of people looking for work, Reuters reported.

Thursday’s data from the Australian Bureau of Statistics (ABS) showed employment fell by 146,000 in August, compared to median forecasts of a drop of 90,000.

The unemployment rate dipped to 4.5%, having already fallen to 4.6% in July when lockdowns also distorted data.

The ABS cautioned that the dip in the jobless rate was due to people dropping out of the labor force given how difficult it was to look while in lockdown. Only people actively looking for work are counted as unemployed, Reuters reported.

“The fall in the unemployment rate reflects a large fall in participation during the recent lockdowns, rather than a strengthening in labor market conditions,” said Bjorn Jarvis, head of labor statistics at the ABS.

“Hours worked data continues to provide the best indicator of the extent of labor market impacts and recovery from lockdowns,” he added.

Hours worked in August slip 3.7% nationally, and by 6.5% in New South Wales where Sydney was closed for the entire month.

Likewise, the participation rate fell a steep 0.8 percentage points to 65.2%, while underemployment jumped a full point to 9.3% as workers’ hours were restricted.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – NZ GDP Grew at Much Faster Pace than Expected in 2nd Quarter

The New Zealand Dollar is trading higher early Thursday, following through to the upside after a rebound the previous session. The catalyst behind today’s early strength is a report that showed stronger than expected economic growth.

At 01:26 GMT, the NZD/USD is trading .7125, up 0.0015 or +0.21%.

New Zealand Economy Surged 2.8% in Q2

New Zealand’s economy grew at a much faster pace than expected in the second quarter, officials said on Thursday, reinforcing the view that the central bank will start lifting interest rates despite a recent outbreak of the coronavirus.

Gross domestic product (GDP) surged 2.8% in the three months through June, Statistics New Zealand said, well ahead of a Reuters poll forecast of a 1.3% increase in growth and the Reserve Bank of New Zealand’s (RBNZ) estimate of 0.7%.

The growth surge follows a drop in unemployment in the second quarter to 4.0% and a rise in annual inflation to 3.3%, above the central bank’s 1-3% target range.

Annual GDP jumped 17.4% due to a very weak base as the country was in a complete COVID-19 lockdown in the second quarter last year. A Reuters poll had expected a 16.3% rise.

Investors Price in RBNZ Rate Hike

The RBNZ delayed raising rates in August after the country was put into a snap COVID-19 lockdown over a new outbreak of the Delta variant of COVID-19 in Auckland, but said a hike was still in the cards. Nonetheless, the market has already priced in a 100% chance of a 25-basis point rate hike at the next central bank meeting on October 6.

Lack of Clarity Over Fed Tapering Underpinning Kiwi

The U.S. inflation rate as measured by the Consumer Price Index (CPI) came in as expected at +5.3% for August, unchanged from July. But the core inflation rate – without food or energy – came in lower than expected at 4.0% and that was not expected.

Both the U.S. CPI and economic expansion may be cooling enough to encourage the Federal Reserve to delay its plans for tapering at its next policy meeting on September 21-22. Although economists expect the Fed to begin tapering by the end of the year, we could see a near-term decline in Treasury yields and the U.S. Dollar. This could help provide further support for the New Zealand Dollar.

Daily Forecast

The New Zealand GDP report was good enough to support the widely expected rate hike by the RBNZ on October 6. That rate increase could be the first of many.

“We expect the RBNZ to ‘look through’ near-term volatility and reduce monetary stimulus, with a series of 25 basis point (rate) hikes starting from next month,” said Mark Smith, Senior Economist at ASB Bank,

With the RBNZ set to make a rate hike and the Federal Reserve still debating whether to begin tapering, the near-term advantage is likely to favor the New Zealand Dollar over the U.S. Dollar.

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

Jobless Claims and Retail Sales Put the Greenback and the U.S Economy in the Spotlight

Earlier in the Day:

It was another busy start to the day on the economic calendar this morning. The Aussie Dollar, Kiwi Dollar, and the Japanese Yen were in action this morning.

For the Kiwi Dollar

GDP numbers were in focus in the early hours.

In the 2nd quarter, the New Zealand economy expanded by 2.8% versus a forecasted 1.3%. The economy had expanded by 1.4% in the previous quarter.

According to NZ Stats,

  • Services industries led the way, with retail trade and accommodation the largest contributor to growth.
  • Air transport and transport support services also delivered support.
  • Household consumption expenditure fell by 1.4%, however, due to a 1.9% decline in household spending on services.

The Kiwi Dollar moved from $0.71253 to $0.71334 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.23% to $0.7122.

For the Aussie Dollar

Employment figures were key this morning.

In August, full employment fell by 68k following a 4.2k decline in July. Employment tumbled by 146.3k, however, versus a forecasted 90.0k decline. In July, employment had risen by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate declining from 66.0% to 65.2%.
  • Year-on-year, the number of unemployed was down by 298,000.

The Aussie Dollar moved from $0.73431 to $0.73365 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.10% to $0.73367.

For the Japanese Yen

In August, Japan’s trade balance fell from a ¥439.4bn surplus to a ¥635.4bn deficit. Economists had forecast a deficit of ¥47.7bn

According to figures released by the  Ministry of Finance,

  • Exports increased by 26.2%, year-on-year, while imports were up 44.7%.
  • To China, exports rose by 12.6%, with exports to the U.S up 22.8%.
  • Exports to Western Europe increased by 14.1%.
  • Imports from China rose by 23.2%, with imports from the U.S up 33.5%.
  • From Western Europe, imports rose by 48.4%.

The Japanese Yen moved from ¥109.359 to ¥109.424 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥109.340 against the U.S Dollar.

The Day Ahead

For the EUR

It’s a quieter day ahead on the economic calendar. Trade data for the Eurozone will be in focus later today. Barring dire numbers, however, the numbers are unlikely to have a material impact on the EUR.

On the monetary policy front, ECB President Lagarde is due to speak later today. Any chatter on policy or the economic outlook would move the dial.

At the time of writing, the EUR was flat at $1.1817.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK ahead of tomorrow’s retail sales figures.

With the lack of stats, we can expect further market reaction to the employment and inflation figures from earlier in the week.

At the time of writing, the Pound was up by 0.02% to $1.3843.

Across the Pond

It’s a busy day ahead. Retail sales, jobless claims, and the Philly FED Manufacturing PMI for September are due out.

Expect the jobless claims and retail sales figures to have a greater impact on the Dollar and market risk sentiment

At the time of writing, the U.S Dollar Spot Index was flat at 92.475.

For the Loonie

It’s a quiet day ahead for the Loonie.

Wholesale sales figures for July are due out later today. Barring particularly dire numbers, however, the numbers should have a muted impact on the majors.

Market risk sentiment will be the key driver on the day.

At the time of writing, the Loonie was down by 0.02% to C$1.2632 against the U.S Dollar.

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

NZD/USD Forex Technical Analysis – Reaction to .7061 – .7121 Retracement Zone Determines Near-Term Direction

The New Zealand Dollar is inching higher on Wednesday as it tries to regain its footing following softer-than-expected U.S. inflation figures that seem to have dampened immediate expectations for an early tapering by the Federal Reserve at next week’s policy meeting.

Kiwi investors are also being forced to deal with weak investor sentiment with global equity markets under pressure. Lingering concerns over the coronavirus spread are also weighing on demand for the higher –yielding currency. The currency is also being capped by worries about the strength of China’s economy after data showed factory and retail sales growth cooled more sharply than expected last month.

At 08:24 GMT, the NZD/USD is trading .7102, up 0.0005 or +0.07%.

In economic news, New Zealand’s current account deficit narrowed to 3 billion NZ dollars (2.13 billion U.S. Dollars) in the June 2021 quarter, the country’s statistics department Stats NZ said on Wednesday.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the session when seller punched through the previous main bottom at .7076. A move through .7157 will change the main trend to up, while a trade through .7170 will reaffirm the uptrend.

The main range is .7316 to .6806. The NZD/USD is currently trading inside its retracement zone at .7061 to .7121.

Additional support levels are layered at .7027, .6988 and .6924.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to .7116.

Bearish Scenario

A sustained move under .7116 will indicate the presence of sellers. Taking out the intraday low at .7074 will indicate the selling pressure is getting stronger. This could trigger a further break into the 50% level at .7061. If this level fails as support then look for the selling to possibly extend into the next 50% level at .7027.

Bullish Scenario

A sustained move over .7116 will signal the presence of buyers. The first upside target is .7121. Overtaking this level will indicate the counter-trend buying is getting stronger. This could trigger a surge into the pair of main tops at .7157 and .7170.

Side Notes

The early price action suggests a downside bias may be developing, however, the weak follow-through to the downside after today’s change in trend suggests it’s going to be a labored event with a few potential support levels protecting the major bottom at .6806.

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

A Busy Economic Calendar Puts the EUR, the Loonie, the Pound, and the Greenback in Focus

Earlier in the Day:

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

For the Aussie Dollar

In September, the Westpac Consumer Sentiment Index rose by 2.0% to 106.2. The Index had fallen by 4.4% to 104.1 in August.

According to the latest Westpac Report,

  • In spite of lockdown measures in Australia’s two major cities, consumer sentiment remained resilient in September.
  • Improving vaccination rates supported consumer confidence in the month.

Looking at the sub-components:

  • Economic conditions next 12-months jumped by 4.6%, with conditions next 5-years up 4.8%.
  • Family finances vs a year ago rose by 1.7%, with finances next 12-months up 2.1%.
  • Time to buy a dwelling jumped by 8.8%, with the Unemployment Expectations Index falling by 3.3%.
  • While the House Price Expectations Index rose by 1.4%, time to buy a major household item fell by 2.7%.

The Aussie Dollar moved from $0.73191 to $0.73134 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.16% to $0.7305.

From China

Industrial production was up by 5.3%, year-on-year, in August versus a forecasted 5.8% increase. In July, production had been up by 6.4%.

Fixed asset investment was up 8.9% versus a forecasted 9.0%. In July, fixed asset investments had been up 10.3%.

The Aussie Dollar moved from $0.73083 to $0.73014 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.11% to ¥109.570 against the U.S Dollar, with the Kiwi Dollar down by 0.34% to $0.7074.

The Day Ahead

For the EUR

It’s a busier day ahead on the economic calendar. Industrial production and wage growth figures for the Eurozone are due out later today. Expect industrial production to have the greater influence on the EUR.

Finalized inflation figures for Italy and France are also due out but should have a muted impact on the EUR.

At the time of writing, the EUR was up by 0.03% to $1.1807.

For the Pound

It’s another busy day ahead on the economic calendar. Inflation figures for August are due out later this morning.

With the markets looking ahead to the BoE monetary policy decision next week, expect today’s figures to be key.

A further pickup in inflationary pressures may force the BoE to make a sooner rather than later move to curb the upward trend in consumer prices.

At the time of writing, the Pound was down by 0.11% to $1.3795.

Across the Pond

It’s another relatively busy day ahead. NY Empire State Manufacturing and industrial production figures will be the key stats of the day.

Import and export price index numbers are also due out but should have a muted impact on the Greenback and the broader markets.

At the time of writing, the U.S Dollar Spot Index was up by 0.02% to 92.641.

For the Loonie

It’s a relatively busy day ahead for the Loonie.

Inflation figures for August are due out later today. With inflation a key area of focus, expect plenty of influence from the numbers.

At the time of writing, the Loonie was down by 0.08% to C$1.2704 against the U.S Dollar.

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

Dollar Falters After U.S. Inflation Rise Eases, Safe-Haven Yen, Franc Up

Several Fed officials have suggested the U.S. central bank could reduce its buying of debt securities by the end of the year, but said an eventual interest rate hike would not happen for some time.

The Fed will hold a two-day monetary policy meeting next week, with investors keen to find out whether a tapering announcement will be made.

Tapering tends to benefit the dollar as it suggests the Fed is one step closer toward tighter monetary policy. It also means the central bank will be buying fewer debt assets, effectively reducing the number of dollars in circulation.

Data on Tuesday showing the U.S. consumer price index, excluding the volatile food and energy components, edged up just 0.1% last month has raised doubts about tapering this year, some analysts said.

August’s core CPI rise was also the smallest gain since February and followed a 0.3% rise in July. The so-called core CPI increased 4.0% on a year-on-year basis after gaining 4.3% in July.

“The softer inflation prints caused investors to push back on bets that the Fed could move sooner to taper bond purchases. Easing inflation would take the heat off the Fed to move prematurely,” said Fiona Cincotta, senior financial markets analyst at City Index.

She also cited U.S. core producer prices (PPI) data for August released last week, which also rose at a slower pace. Excluding the food, energy and trade services elements, producer prices rose 0.3% last month, the smallest gain since last November. The so-called core PPI shot up 0.9% in July.

“So the evidence does appear to be building that peak inflation has passed. That said, supply chain bottlenecks are expected to persist for a while so it’s unlikely that either PPI or CPI will drop dramatically or rapidly,” Cincotta added.

In afternoon trading, the dollar index was slightly down at 92.601, moving away from a more than a two-week high on Monday.

The euro was flat against the dollar at $1.1807.

Risk appetite soured on Tuesday as well, with Wall Street shares down while U.S. Treasury prices were up sharply, pushing yields lower.

Investors looked past decelerating inflation and focused on uncertainties about U.S. growth now clouded by the economic impact of the Delta variant.

Against the safe-haven Swiss franc, the dollar dropped 0.4% to 0.9189 francs.

Versus another safe-haven, the Japanese yen, the dollar fell 0.4% to 109.615 ye

In other currencies, the Australian dollar fell to a two-week low after Reserve Bank of Australia Governor Philip Lowe painted a very dovish policy outlook with no rate hikes on the horizon until 2024.

The Aussie dollar was last down 0.7% at US$0.7319. In cryptocurrencies, bitcoin was last up 3.1% at $46,400 . Ether changed hands at $3,344, up 1.9%.

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

(Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Saikat Chatterjee in London and Shreyashi Sanyal in Bengalaru; Editing by Nick Zieminski and Paul Simao)

 

Economic Data Puts the Pound and the Greenback in the Spotlight

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Aussie Dollar was in action in the early hours. Later this morning, finalized industrial production figures are also due out of Japan. Barring a marked revision from prelim figures, however, we don’t expect the production numbers to influence.

For the Aussie Dollar

House prices and business confidence were in focus this morning.

In the 2nd quarter, house prices were up 6.7%, quarter-on-quarter versus a forecasted 6.0% increase. House prices had risen by 5.4% in the previous quarter.

Of greater significance, however, were business confidence figures.

In August, the NAB Business Confidence Index increased from -8 to -5.

According to the August Survey,

  • Business conditions rose by 4 points to +14 after having seen marked declines for 2 consecutive months.
  • In spite of the pickup in confidence, the confidence index remained in the deep red, highlighting the economic uncertainty stemming from lockdown measures.
  • While confidence and conditions have taken a hit, current levels remain well above those seen back in 2020, however.

The Aussie Dollar moved from $0.73682 to $0.73638 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.06% to $0.73635.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.06% to ¥110.060 against the U.S Dollar, with the Kiwi Dollar down by 0.03% to $0.7117.

The Day Ahead

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Finalized August inflation figures for Spain are due out later this morning.

Barring a marked upward revisions, however, we don’t expect the numbers to have a material impact on the EUR, however.

At the time of writing, the EUR was down by 0.03% to $1.1808.

For the Pound

It’s busy day ahead on the economic calendar. Average earnings, claimant counts, and unemployment figures will be in focus.

With the BoE in action next week, expect plenty of interest in the claimant counts and the unemployment rate.

At the time of writing, the Pound was up by 0.03% to $1.3842.

Across the Pond

It’s a relatively busy day ahead. August inflation figures are due out later today. With the FED seeing inflationary pressures as transitory, another spike would give the hawks the upper hand and the Dollar a nudge northwards.

Economists have forecast for the annual rate of core inflation to soften from 4.3% to 4.2%.

At the time of writing, the U.S Dollar Spot Index was up by 0.10% to 92.675.

For the Loonie

It’s a relatively quiet day ahead for the Loonie.

Manufacturing sales figures for July are due out later today. With little else for the markets to consider, we can expect some influence from the numbers, though the impact is unlikely to be long-lasting.

Market risk sentiment and crude oil prices will remain key as uncertainty over the economic recovery remains…

At the time of writing, the Loonie was down by 0.02% to C$1.2651 against the U.S Dollar.

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

U.S. Dollar Rises vs Most Currencies as Fed Taper Talk Gathers Pace

The greenback, however, came off its highs in afternoon trading.

The dollar index earlier rose to 92.887, its highest since Aug. 27. It was last up slightly at 92.664.

A round of U.S. economic data is due out this week, starting with consumer prices on Tuesday, which will give the latest update on how hot inflation has been ahead of next week’s Fed meeting.

Philadelphia Fed President Patrick Harker became the latest official to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.

Tapering talk has boosted the dollar, said Erik Nelson, macro strategist at Wells Fargo Securities in New York.

“We noticed from the Fed communication that they would like to de-link the taper from the rate hike,” Nelson said. “But it will take a lot of convincing and frankly a lot of time for the market to change its reaction function. For now, a taper timeline is closely linked to a rate hike timeline in the market.”

Tapering typically lifts the dollar as it means a step toward tighter monetary policy. It also means the Fed will be buying fewer debt assets, which suggests there will be fewer dollars in circulation.

The Wall Street Journal reported on Friday that Fed officials will seek an agreement to begin paring bond purchases in November.

Aside from inflation, U.S. retail sales and production figures are also scheduled for release this week.

“Another high CPI (consumer price index) reading this week in the face of weakening economic data could begin to paint the Fed into a corner as pressure mounts for stimulus normalization,” said Christopher Vecchio, senior analyst at DailyFX.com, the research unit of forex broker IG.

The euro was among the currencies to lose ground to the dollar, dipping to $1.1770, its lowest in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases. The euro was last down 0.1% at $1.1801.

Against the yen, the dollar was up 0.1% at 110 yen. The dollar also gained 0.5% versus the Swiss franc to 0.9228.

In the cryptocurrency market, bitcoin was down 2.8% at $44,762.

Litecoin, with a market cap of nearly $12 billion and one of the earliest digital currencies in circulation, fell 2.6% to $180.78, according to crypto data tracker CoinGecko, after Walmart Inc said a press release regarding the retailer’s partnership with the cryptocurrency was fake.

Litecoin rose as much as 27.4% on the fake news.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Iain Withers and Saikat Chatterjee in London; Editing by Angus MacSwan, Will Dunham and Dan Grebler)

A Quiet Economic Calendar to Test Risk Sentiment and Dollar Appetite

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. There were no majors stats for the markets to consider in the early hours.

The Majors

At the time of writing, the Japanese Yen was up by 0.03% to ¥109.910 against the U.S Dollar, with the Aussie Dollar up by 0.12% to $0.7365. The Kiwi Dollar was up by 0.04% to $0.7113.

The Day Ahead

For the EUR

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

The lack of stats will leave the EUR in the hands of market risk sentiment on the day.

At the time of writing, the EUR was down by 0.03% to $1.1811.

For the Pound

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

At the time of writing, the Pound was down by 0.01% to $1.3838.

Across the Pond

There are no major stats due out of the U.S to provide the Dollar and the broader market with direction later in the day.

The lack of stats will leave the Dollar in the hands of market risk sentiment on the day. COVID-19 news updates and geopolitics will remain key drivers on the day.

At the time of writing, the U.S Dollar Spot Index was up by 0.06% to 92.641.

For the Loonie

It’s a quiet day ahead for the Loonie.

There are no major stats due out of Canada to provide the Loonie with direction. While there are no stats to consider, OPEC’s monthly report and impact on crude oil prices will influence.

At the time of writing, the Loonie was up by 0.10% to C$1.2679 against the U.S Dollar.

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

The Week Ahead – A Busy Economic Calendar to Test Market Risk Sentiment…

On the Macro

It’s a busy week ahead on the economic calendar, with 62 stats in focus in the week ending 17th September. In the week prior, 42 stats had also been in focus.

For the Dollar:

Inflation figures for August kick things off on Tuesday. We’ve seen labor market numbers disappoint. Another spike in inflation, however, would raise questions over whether the FED can stand pat on policy.

On Wednesday, industrial production figures will be in focus ahead of a particularly busy Thursday.

Retail sales, Philly FED Manufacturing PMI, and weekly jobless claims will be in focus on Thursday.

Expect retail sales and jobless claims to be key.

At the end of the week, consumer sentiment figures for September will also influence.

In the week ending 10th September, the Dollar Spot Index rose by 0.59% to 92.582.

For the EUR:

It’s a quieter week on the economic data front.

Eurozone 2nd quarter wage growth and July industrial production figures will be in focus on Wednesday.

In the 2nd half of the week, trade data and finalized inflation figures for the Eurozone will also influence.

For the week, the EUR fell by 0.56% to $1.1814.

For the Pound:

It’s a busier week ahead on the economic calendar.

Employment figures will draw attention on Tuesday. August claimant counts and July’s unemployment rate will be key.

On Wednesday, inflation figures will also draw plenty of attention ahead of retail sales figures on Friday.

The week’s data set should give the BoE enough data to make a more informed decision on the policy front.

The Pound ended the week down by 0.23% to $1.3839.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Manufacturing sales on Tuesday and wholesale sales figures on Thursday will influence.

For the week, however, August inflation figures due out on Wednesday will be key stat.

While the stats will influence, crude oil prices and OPEC’s monthly report will also provide direction.

The Loonie ended the week down 1.34% to C$1.2692 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Consumer and business confidence figures will be key on Tuesday and Wednesday.

On Wednesday, inflation figures will also draw interest, though expect employment figures on Thursday to have a greater impact.

Following the latest lockdown measures and the RBA’s more dovish stance, the markets will be looking to assess the damage.

The Aussie Dollar ended the week down by 1.39% to $0.7356.

For the Kiwi Dollar:

It’s another quiet week ahead.

2nd quarter GDP numbers are due out on Thursday ahead of Business PMI numbers on Friday.

Expect the GDP numbers to be key. While the RBNZ hit pause on lifting rates, the markets will be expecting solid numbers.

The Kiwi Dollar ended the week down by 0.63% to $0.7113.

For the Japanese Yen:

BSI large manufacturing conditions data for Q3 and trade data for August due out on Monday and Thursday will be key.

Finalized industrial production figures on Tuesday should have a muted impact on the Yen and the Asian markets…

The Japanese Yen fell by 0.21% to ¥109.94 against the U.S Dollar.

Out of China

Fixed asset investment, industrial production, and retail sales figures on Wednesday will be in focus.

Expect industrial production and retail sales figures to be the key numbers…

The Chinese Yuan ended the week up by 0.18% to CNY6.4443 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia remain the main areas of interest for the markets. News updates from the Middle East, in particular, will need monitoring following recent events in Afghanistan.

AUD/USD and NZD/USD Fundamental Daily Forecast – Fed Tapering Fears Help Erase Early Gains

The Australian and New Zealand Dollars finished mixed on Friday. After giving back earlier gains, the Aussie closed lower while the Kiwi managed to post a slight advance.

Improved risk sentiment helped boost the currencies for most of the session but conditions changed following the release of a stronger-than-expected U.S. Producer Price Index report. The PPI’s solid gain in August indicated that high inflation is likely to persist for a while. This drove Treasury yields higher as well as the U.S. Dollar as investors increased bets on a Federal Reserve tapering announcement at its September 21-22 policy meeting.

On Friday, the AUD/USD settled at .7354, down 0.0016 or -0.21% and the NZD/USD finished at .7115, up 0.0005 or +0.07%.

Early Strength Fades

The AUD/USD and NZD/USD were trading higher earlier Friday as traders tried to recapture some of its weekly loss. The strength was supported by a jump in riskier assets as investors reacted to the news that U.S. President Joe Biden had a wide-ranging call with his Chinese counterpart Xi Jinping on Thursday. The news raised hopes that the simmering tensions between the two super powers would ease.

Bullish traders were also betting that rapid progress on coronavirus vaccinations domestically would help stimulate the economic rebound in coming months. While Australia is still reporting rising coronavirus cases, the share of the population vaccinated has also picked up markedly and should surpass that in the United States in the coming weeks, Reuters reported.

Meanwhile much of New Zealand, barring the city of Auckland, has already seen an easing of stay-at home rules and the government has been seeking extra shots from abroad.

The bullish news was offset during the U.S. session when robust producer inflation raised concerns that the Federal Reserve would have to begin reining in its massive stimulus sooner-than-expected.

US Dollar, Treasury Yields Jump on Fed Tapering Bets

U.S. producer prices increased solidly in August, leading to the biggest annual gain in nearly 11 years, suggesting that high inflation is likely to persist for a while as the unrelenting COVID-19 pandemic continues to pressure supply chains.

The producer price index for final demand rose 0.7% last month after two straight monthly increases of 1.0%, the Labor Department said. The gain was led by a 0.7% advance in services following a 1.1% jump in July.

The Aussie and Kiwi were also pressured by a rebound in the U.S. Dollar. The greenback rose after Cleveland Fed President Loretta Mester said on Friday that she would still like the central bank to begin tapering asset purchases this year, joining the chorus of policymakers making it clear that their plans to begin scaling back support were not derailed by weaker jobs growth in August, Reuters reported.

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