The Weekly Wrap – Economic Datta and COVID-19 Hit Riskier Assets

The Stats

It was a quiet week on the economic calendar, in the week ending 25th September.

A total of 32 stats were monitored, following 69 stats from the week prior.

Of the 32 stats, 13 came in ahead forecasts, while 17 economic indicators came up short of forecasts. 2 stats were in line with forecasts in the week.

Looking at the numbers, 15 of the stats also reflected an upward trend from previous figures. The remaining 17 stats reflected a deterioration from previous.

For the Greenback, the recovery continued following last week’s pullback. In the week ending 25th September, the Dollar Spot Index rallied by 1.85% to 94.624. In the week prior, the Dollar had fallen by 0.44% to 92.926.

Out of the U.S

It was a relatively quiet week on the economic data front.

Key stats included September’s prelim private sector PMIs, the weekly jobless claims, and August durable goods and core durable orders.

The stats were skewed to the negative in the week.

Service sector growth slowed marginally, with the PMI slipping from 55.0 to 54.6, which weighed on the composite. The manufacturing sector saw a pickup in growth, however, with the PMI rising from 53.1 to 53.5.

Labor market numbers also disappointed. In the week ending 18th September, initial jobless claims came in at 870k. This was up from 866k from the week prior.

At the end of the week, durable goods orders and core durable goods orders wrapped up the week.

In August, durable goods orders rose by 0.4%, with core durable goods orders also rising by 0.4%. The numbers fell well short of forecasts and increases in July.

FED Chair Powell was also a key driver in the week.

Giving testimony on Capitol Hill, Powell talked of the need for more support from all levels of the U.S government. The FED Chair called for more government support to speed up the economic recovery. Powell noted that the outlook remained dependent upon the containment of the coronavirus. Aligned with other central banks, Powell also pointed out that, while the economy is showing a marked improvement, uncertainty remained.

In the equity markets, the NASDAQ rose by 1.11%, while the Dow and S&P500 fell by 1.75% and by 0.63% respectively.

Out of the UK

It was a quieter week on the economic calendar.

Key stats included September’s prelim private sector PMIs and CBI Industrial Trend Orders.

The stats were also skewed to the negative.

For September, the CBI Industrial Trend Orders fell from -44 to -48. Economists had forecast a rise to -40.

Of greater significance, however, was slower service sector growth at the end of the 3rd quarter.

The services PMI fell from 58.8 to 55.1. Manufacturing sector activity also slowed, with the PMI falling from 55.2 to 54.3.

Following the talk of negative rates, the stats were not bad enough to force a move by the BoE.

A reintroduction of containment measures could adversely affect the path of the economic recovery, however.

On the Brexit front, failing hopes of a trade agreement between the EU and Britain also weighed.

In the week, the Pound slid by 1.32% to $1.2746, reversing a 0.95% gain from the previous week.

The FTSE100 ended the week down by 2.74%, following a 0.42% decline from the previous week.

Out of the Eurozone

It was another busy week on the economic data front.

Key stats included consumer and business confidence figures and prelim private sector PMIs for September.

It was a mixed bag on the data front.

Eurozone and German consumer confidence saw marginal improvements but not enough to impress. From Germany, business confidence also improved, while coming up short of forecasts.

Key in the week, however, was the prelim PMIs.

While manufacturing sector activity picked up in September, service sector activity slumped, raising concerns over the economic recovery.

France, Germany, and the Eurozone saw a contraction in the services sector. Partially offset by a pickup in the manufacturing sector activity, private sector activity stalled at the end of the quarter.

The Eurozone’s services PMI fell from 50.5 to 47.6, with the composite PMI declining from 51.9 to 50.1. On the positive, was a rise in the manufacturing PMI from 51.7 to 53.7.

While the stats provided direction, a spike in new COVID-19 cases in Europe weighed heavily on the EUR. Concerns over the possible need to reintroduce lockdown measures drove demand for the safety of the Greenback.

For the week, the EUR slid by 1.77% to $1.1631. In the week prior, the EUR had fallen by 0.05% to $1.1840.

For the European major indexes, it was a particularly bearish week. The CAC40 and DAX30 slid by 4.99% and by 4.93% respectively, with the EuroStoxx600 falling by 3.60%.

For the Loonie

It was a particularly quiet week on the economic calendar.

Economic data was limited to August house price figures that had a muted impact on the Loonie.

Concerns over the global economic recovery amidst the spike in new COVID-19 cases weighed on crude oil prices and the Loonie.

The Loonie fell by 1.38% to end the week at C$1.3386. In the week prior, the Loonie had fallen by 0.19%.

Elsewhere

It was a particularly bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 25th September, the Aussie Dollar slid by 3.54% to $0.7031. The Kiwi Dollar wasn’t far behind, ending the week down by 3.15% to $0.6546

For the Aussie Dollar

It was another quiet week for the Aussie Dollar on the economic calendar.

There were no material stats from Australia to provide the Aussie Dollar with direction.

The lack of stats left market sentiment towards COVID-19 and the global economic recovery to sink the Aussie.

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included August trade figures that failed to support the Kiwi Dollar late in the week.

In August, New Zealand’s trade balance slid from a NZ$447m surplus to a NZ$353m deficit. Year-on-year, however, the trade surplus widened from NZ$50m to NZ$1,340m.

A sharp fall in imports and a rise in Kiwi fruit and aircraft drove the trade surplus to its largest since 2014.

On the monetary policy front, the RBNZ was also in action mid-week. Following the talk of negative rates in the month prior, the RBNZ continued to promise further support if needed. In the RBNZ Statement, the RBNZ stated that additional support could come in the form of Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

September’s private sector PMIs were in focus mid-week.

While the numbers were on the positive side, the private sector continued to contract at a marked pace in September. The Manufacturing PMI rose from 47.2 to 47.3, with the Services PMI rising from 45.0 to 45.6.

According to the prelim survey, new orders fell at a weaker pace, while new export orders fell at a stronger pace.

The pace of job shedding eased across the private sector, while the backlogs of work rose at a stronger pace.

Optimism improved across the private sector in spite of the stronger decline in new export orders.

September’s PMIs reaffirmed the BoJ’s statement last week that the Japanese economy was in a serious condition.

The Japanese Yen fell by 0.97% to ¥105.58 against the U.S Dollar. In the week prior, the Yen had risen by 1.50%.

Out of China

It was a particularly quiet week on the economic data front.

There were no material stats to provide the Yuan direction in the week.

On the monetary policy front, the PBoC was in action, however. In line with forward guidance from the summer and market expectations, the PBoC left loan prime rates unchanged.

On the geopolitical front, tensions between the U.S and China continued to hit the global financial markets.

Early in the week, Trump continued to blame China for the COVID-19 pandemic at the UN National Assembly. The war of words continued in the week.

In the week ending 25th September, the Chinese Yuan fell by 0.81% to CNY6.8238. In the week prior, the Yuan had risen by 0.95%.

The CSI300 and Hang Seng fell by 3.53% and by 4.99% respectively.

Economic Data Puts the U.S Economy Back 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 to provide direction through the Asian session, leaving the markets to take their cues from the U.S.

For the Majors

At the time of writing, the Japanese Yen was down by 0.07% ¥105.48 against the U.S Dollar. The Aussie Dollar was up by 0.18% to $0.7060, with the Kiwi Dollar up by 0.14% to $0.6555.

The Day Ahead:

For the EUR

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

With a lack of major stats, French and Italian consumer confidence figures for September will draw attention early in the session.

With little else for the markets to focus, COVID-19 and Brexit will remain areas of focus on the day.

At the time of writing, the EUR was down by 0.03% to $1.1668.

For the Pound

It’s also a 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 leave the Pound in the hands of Brexit and COVID-19 on the day. As things stand, new containment measures can only be negative for the UK economy and the Pound near-term.

For the bulls, the only real hope would be a breaking of the Brexit deadlock.

At the time of writing, the Pound was up by 0.07% to $1.2756.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. Key stats include August durable goods and core durable goods orders.

On the monetary policy front, expect any FOMC member chatter to also influence. COVID-19 news updates and any chatter from the U.S government will also provide direction.

The Dollar Spot Index was flat at 94.352 at the time of writing.

For the Loonie

It’s another particularly quiet day ahead, with no material stats due out today.

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

Key areas of focus remain U.S – China relations and COVID-19.

At the time of writing, the Loonie was up by 0.11% to C$1.3347 against the U.S Dollar.

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

AUD/USD and NZD/USD Fundamental Daily Forecast –Weaker as Investors Price In Future Rate Cuts

The Australian and New Zealand Dollars are under pressure again on Thursday as risk sentiment continues to deteriorate, reducing the Aussie and Kiwi’s appeal as a higher-yielding asset. The proverbial “perfect storm” of negative factors is driving the price action.

The blame for the rapid decline in the Aussie and Kiwi can be placed on a number of factors including rising global COVID-19 infection rates, no evidence of any progress on a U.S. fiscal support bill and the usual volatility before a U.S. Presidential election.

At 06:58 GMT, the AUD/USD is trading .7031, down 0.0042 or -0.59% and the NZD/USD is at .6523, down 0.0028 or -0.43%.

Central bank comments this week have also helped fuel the selling. Dovish comments from a Reserve Bank of Australia (RBA) official and a dovish tone from the Reserve Bank of New Zealand (RBNZ) are also factors weighing on sentiment as Aussie investors adjust positions due to the possibility of a small rate cut in October. Meanwhile, Kiwi investors have become more convinced that the central bank will move to negative rates in early 2021.

Then there’s the U.S. Dollar, which has been on a tear, hitting its highest level since mid-July, since the September 16 Federal Reserve monetary policy announcements. The money that is leaving the Aussie and Kiwi is moving into the U.S. Dollar as investors look for a safe place to park their investment capital until the volatility settles down.

New Zealand:  Export Boom and Import Plunge Drives Big Trade Surplus

This month’s report showed that the COVID-19 pandemic continues to push New Zealand’s trade balance into positive territory. In fact, the country recorded its largest trade surplus since 2014 – the height of the last dairy boom.

However, today’s figures – a $1.3 billion annual goods trade surplus for the August 2020 year – reflected a rise in exports and a fall in imports over the past months, StatsNZ said. Imports were down by almost $1 billion for the month.

A similar trend was evident for the June quarter current account – which was recorded the target surplus since 1971.

There was little reaction to the news since the numbers were in line with expectations.

Short-Term Outlook

Deteriorating risk sentiment and dovish central bank outlooks are expected to weigh on the Aussie and Kiwi over the short-run.

For the Australian Dollar, economists at Westpac changed their view and are now expecting the RBA to lower interest rates to 0.10% from 0.25% at its next policy meeting on October 6. Earlier in the week, the tone for the Aussie was weakened after a senior central banker on Tuesday flagged the prospect of currency market intervention and negative interest rates.

In New Zealand, the Kiwi is under pressure after the RBNZ held its policy rate at 0.25%, but warned of job losses and business closures, which reinforced expectations it would move to negative interest rates in coming months.

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

COVID-19, Geopolitics, Powell, and U.S Jobless Claims will Keep the Markets Busy

Earlier in the Day:

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

For the Kiwi Dollar

Trade data was in focus in the early hours of this morning. In August, New Zealand’s trade balance slid from a NZ$447m surplus to a NZ$353m deficit. Year-on-year, the trade surplus widened from NZ$50m to NZ$1,340m.

According to NZStats,

  • A close to NZ$1bn slump in imports led to the largest annual trade surplus since 2014.
  • The value of monthly goods imports fell NZ$940m (-16%) from August 2019, with imports declining across all the main economic categories.
  • By contrast, higher exports of kiwifruit and aircraft supported a NZ$349m (+8.6%) rise in exports from August 2019.

The Kiwi Dollar moved from $0.65500 to $0.65507 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.35% to $0.6540.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.04% ¥105.43 against the U.S Dollar, with the Aussie Dollar down by 0.23% to $0.7056.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany’s IFO Business Climate Index and sub-index figures for September are due out.

With little else for the markets to focus on in the early part of the session, expect any slump in sentiment to weigh.

Away from the economic calendar, the latest COVID-19 numbers, and any chatter from member states on curbing the spread will be key.

On the geopolitical risk front, the markets will also need to monitor chatter on Brexit and any antagonizing messages from Beijing or Washington.

At the time of writing, the EUR was up by 0.02% to $1.1662.

For the Pound

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

On the monetary policy front, however, BoE Gov. Bailey is scheduled to speak later this afternoon.

Following the government’s new COVID-19 containment measures, expect any chatter on monetary policy to influence.

Away from the economic calendar, there is also Brexit and the latest COVID-19 figures that will garner plenty of interest. The market fear will be that the British Government may be forced into delivering stricter containment measures should the number of new cases continue to rise.

At the time of writing, the Pound was down by 0.05% to $1.2718.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. Key stats include August new home sales and the weekly jobless claims figures.

Expect the weekly jobless claims numbers to have the greatest impact on the day. An unexpected rise amidst the recent rise in new COVID-19 cases would test market risk appetite.

Later in the day, FED Chair Powell is due to deliver another day of testimony that will also draw plenty of attention. U.S Treasury Secretary Mnuchin is also scheduled to speak, which could be interesting…

The Dollar Spot Index was down by 0.01% to 94.383 at the time of writing.

For the Loonie

It’s a particularly quiet day ahead, with no material stats due out today.

The lack of stats will leave the Loonie in the hands of market risk sentiment.

Key areas of focus remain U.S – China relations and COVID-19.

At the time of writing, the Loonie was down by 0.04% to C$1.3391 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 – Weakens Under .6589; Possible Short-Covering Rally Over .6607

The New Zealand Dollar is being pressured on Wednesday by a stronger U.S. Dollar and a dovish Reserve Bank of New Zealand (RBNZ) that left the door open for more interest rate cuts.

Early in the session, the RBNZ held its official cash rate at a record low and hinted at further easing while warning the economy may need support for a long time as the world grapples with the coronavirus pandemic.

At 06:00 GMT, the NZD/USD is trading .6613, down 0.0021 or 0.31%.

The RBNZ also retained its large scale asset purchase (LSAP) program at NZ$100 billion ($66.1 billion).

It added that further stimulus may be needed and that it was prepared to use additional tools like a cheap funding facility for banks, negative rates, and purchases of foreign assets.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trade through .6601 earlier in the session changed the main trend to down. The main trend will change to up on a move through .6798. This is highly unlikely, but there is room for a counter-trend 50% to 61.8% retracement especially if the Forex pair closes higher today.

The main range is .6381 to .6798. Its retracement zone at .6589 to .6540 is the primary downside target. Trader reaction to this zone could determine the longer-term direction of the NZD/USD.

The short-term range is .6489 to .6798. The NZD/USD is currently straddling its retracement zone at .6607 to .6644. Trader reaction to this zone could determine the direction of the Forex pair on Wednesday.

The minor range is .6798 to .6599. If momentum shifts to the upside, we could see a near-term rally into its retracement zone at .6699 to .6722.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the short-term Fibonacci level at .6607.

Bearish Scenario

A sustained move under .6607 will indicate the presence of sellers. This could trigger a quick break into the intraday low at .6599, followed by the main 50% level at .6589.

Watch for a technical bounce on the first test of .6589, but if it fails then look for a possible acceleration to the downside with the main Fibonacci level at .6540 the next likely target.

Bullish Scenario

A sustained move over .6607 will signal the presence of buyers. This could trigger a short-covering rally into the short-term 50% level at .6644. Since the main trend is down, sellers could return on a test of this level. Overcoming it, however, could trigger an acceleration to the upside.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – RBNZ May Be Preparing to Move on Negative OCR

The New Zealand Dollar is trading lower but clawing back some of its earlier losses after the Reserve Bank of New Zealand (RBNZ) held its official cash rate at 0.25% in a widely expected decision on Wednesday, as data suggested the economic hit from the corona virus was less severe than initially feared.

Economists in a Reuters poll had unanimously expected the RBNZ to hold rates. The bank also retained its large scale asset purchase (LSAP) programme at as much as NZ$100 billion ($66.32 billion).

At 03:15 GMT, the NZD/USD is trading .6615, down 0.0018 or -0.28%. The low of the session is .6599.

Policymakers also warned monetary policy may need to provide significant economic support for a long time as the world grapples with the coronavirus pandemic.

Although the initial response to the RBNZ announcements was to the upside, traders should not be fooled. This move is likely being fueled by profit-taking since the news has probably been baked into the market since the NZD/USD hit a multi-year high at .6798 on September 18.

Furthermore, the RBNZ may have struck a dovish note when it said further stimulus may be needed and it was prepared to use additional tools like a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.

“Members agreed that monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability,” RBNZ policymakers said in a post-meeting statement.

This was the fourth time the RBNZ has held rates this year, after stunning markets with a 75 basis points cut in an emergency meeting in March as COVID-19 broke out across New Zealand.

Recent Economic Data that Policymakers Considered in the Decision Process

New Zealand fell into its deepest economic recession on record in the second quarter, data showed last week.

The RBNZ also said the ongoing virus-led activity restrictions – most notably in Auckland – had also continued to dampen economic activity, and business and consumer confidence.

Finally, the bank said it expects a rise in unemployment and an increase in firm closures, as weak economic conditions continue and as government spending measures like wage subsidies.

Daily Forecast

The early price action suggests the dovish RBNZ was already priced into the currency, so we wouldn’t be surprised by a technical bounce. A move like this would likely attract new short-sellers since central bank policymakers continued to set the stage for negative rates in Wednesday’s policy statement. Activity in the futures markets shows traders are anticipating a move to negative rates early next year.

Additional selling pressure could come from a stronger U.S. dollar, which is gaining strength on worries about a surge in COVID-19 cases and it negative impact on the global economic recovery.

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

Economic Data, the FED Chair, COVID-19, and Brexit in Focus

Earlier in the Day:

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

For the Japanese Yen

Prelim private sector PMIs for September were in focus this morning.

The Manufacturing PMI rose from 47.2 to 47.3, with the Services PMI increasing from 45.0 to 45.6.

According to the September prelim survey,

  • Across the manufacturing sector, production and new orders saw a marked decline once more.
  • By contrast, the rate of job shedding eased to a 4-month low, with business confidence hitting the highest level in over 2-years.
  • Weak external demand weighed heavily on new business across the service sector, which continued to slide at a marked pace.
  • Service sector employment contracted for a 7th consecutive month in September, with incomplete work continuing to decline.

The Japanese Yen moved from ¥105.074 to ¥105.142 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.21% ¥105.15 against the U.S Dollar.

For the Kiwi Dollar

The RBNZ held interest rates steady at 0.25% and the LSAP at NZ$100bn, which was in line with market expectations.

Salient points from the RBNZ Statement included:

  • Economic information available since the August statement confirmed that economic activity remained well below pre-COVID-19 levels.
  • Ongoing restrictions, particularly in Auckland, have continued to dampen economic activity and business and consumer confidence.
  • Any significant change in the domestic and global economic outlook remains hinged on the containment of the virus, which is highly uncertain.
  • International border restrictions continue to materially curtail migration and tourism.
  • Commodity prices for NZ exports remain robust. This has been partially offset, however, by the Kiwi Dollar exchange rate moderating the return to local export producers.
  • The Committee expects a rise in unemployment and an increase in firm closures.
  • Members agreed that monetary policy will need to provide significant support for a long time to come. They also agreed that they are prepared to provide additional stimulus.
  • Additional support could come in the form of Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.

The Kiwi Dollar moved from $0.66022 to $0.6643 upon release of the statement. At the time of writing, the Kiwi Dollar was down by 0.12% to $0.6624.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.53% to $0.7133.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Ahead of the European open, Germany’s GfK Consumer Climate figures are due out for October.

While we can expect plenty of EUR sensitivity to consumer confidence figures, the focus will be on the PMI numbers.

Later in the morning, prelim September private sector PMIs for France, Germany, and the Eurozone will be the key drivers.

While manufacturing PMIs remain important, expect the Service PMIs and the Eurozone’s composite to have the greatest impact.

Another spike in COVID-19 numbers could mute the effects of any positive numbers, however. A reintroduction of lockdown measures would materially hit both services and manufacturing…

At the time of writing, the EUR was down by 0.22% to $1.1682.

For the Pound

It’s also a relatively busy day ahead on the economic calendar. Prelim private sector PMIs for September are due out later today.

Expect the focus to be on the services PMI.

Away from the economic calendar, there’s also Brexit and COVID-19 to consider. Last Monday, the government reintroduced containment measures to curb the spike in new cases. This week, further measures have been introduced that could materially impact consumption and service sector activity.

With the BoE having already floated the idea of negative rates, expect any further containment measures to fuel expectations of a rate cut.

At the time of writing, the Pound was down by 0.08% to $1.2723.

Across the Pond

It’s a busier day ahead for the U.S Dollar. Key stats include prelim private sector PMI figures for September.

The markets will be looking for a pickup in service sector activity to support riskier assets.

Later in the day, FED Chair Powell is due to deliver testimony that will also draw plenty of attention.

The Dollar Spot Index was up by 0.10% to 94.084 at the time of writing.

For the Loonie

It’s a particularly quiet day ahead, with no material stats due out today.

The lack of stats will leave the Loonie in the hands of the prelim PMI numbers from the Eurozone and the U.S.

Expect any further spikes in new COVID-19 cases to also influence ahead of the weekly EIA crude oil inventory numbers.

At the time of writing, the Loonie was down by 0.05% to C$1.3311 against the U.S Dollar.

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

FED Chair Powell Puts the Dollar in Focus as COVID-19 Continues to Rile the Markets

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 to provide direction in the early part of the day.

A lack of stats left the markets to consider the market moves through the European and U.S sessions on Monday.

Risk aversion plagued as investors considered the possibility of a reintroduction of lockdown measures across the EU.

Recent spikes in new COVID-19 cases stemming from governments looking to boost economic activity could ultimately derail any recovery.

The Majors

At the time of writing, the Japanese Yen was up by 0.11% ¥104.53 against the U.S Dollar. The Aussie Dollar was down by 0.21% to $0.7209, with the Kiwi Dollar down by 0.01% to $0.6667.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Eurozone consumer confidence figures are due out late into the European session.

The bigger question, however, is whether the latest survey captures the effects of the latest COVID-19 spike.

A continued rise in new cases from the weekend will likely continue to test EUR support levels.

At the time of writing, the EUR was down by 0.08% to $1.1762.

For the Pound

It’s also a quiet day ahead on the economic calendar. CBI Industrial Trend Order figures for September are due out.

It remains to be seen whether there will be any sensitivity to the numbers, however. The threat of further lockdown measures as a result of an upward trend in new COVID-19 cases will have a far greater impact.

To make matters worse, the Pound also has Brexit to face in the week as the Internal Market Bill continues t cause political friction.

At the time of writing, the Pound was down by 0.07% to $1.2808.

Across the Pond

It’s a quiet day ahead for the U.S Dollar. Key stats include August’s existing home sales figures.

The numbers are unlikely to have a muted impact on the Dollar and market risk sentiment, however.

FED Chair Powell is in the spotlight once more, giving testimony on Capitol Hill. With the latest spike in new COVID-19 cases, Powell could take an even more cautious stance on the economic outlook. In the summer, the FED Chair had continued to cite COVID-19 as the greatest threat to an economic recovery.

The Dollar Spot Index was down by 0.04% to 93.623 at the time of writing.

For the Loonie

It’s a particularly quiet day ahead, with no material stats due out today.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day. A real threat of a reintroduction of lockdown measures in key economies does not bode well…

At the time of writing, the Loonie was down by 0.06% to C$1.3316 against the U.S Dollar.

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

AUD/USD and NZD/USD Fundamental Weekly Forecast – RBNZ to Hold Rates Steady, Traders Pricing-in RBA Rate Cut

The Australian and New Zealand Dollars closed higher last week against the U.S. Dollar, but a drop in appetite for riskier assets may have limited gains. Stronger-than-expected domestic data helped underpin the Aussie, while Kiwi investors shrugged off a steep decline in quarterly GDP, choosing instead to focus on expectations for better numbers during the third quarter as the government lifts COVID-19 restrictions.

Last week, the AUD/USD settled at .7290, up 0.0008 or +0.10% and the NZD/USD finished at .6758, up 0.0092 or 1.37% after touching a multi-year high.

Australian Dollar

The Australian Dollar reversed early losses last week after highly anticipated minutes from the central bank’s September monetary policy meeting stopped short of signaling a further cut to the cash rate.

The minutes showed the Reserve Bank of Australia (RBA) will maintain its “highly accommodative settings” as long as required and will continue to consider how further policy measures could support the economy. However, it did not indicate a policy action was imminent.

In other news, Australia’s unemployment rate fell, but those without work say it is not getting any easier to find a job, especially in locked-down Victoria.

Official Bureau of Statistics figures show 111,000 jobs were created last month pulling the headline unemployment rate down from 7.5 to 6.8 percent.

The percentage of underemployed people, who wanted to work more hours than they did, remained steady at 11.2 percent.

Total hours worked rose 1.6 percent last month but is still down 5.1 percent on August last year.

New Zealand Dollar

New Zealand fell into its deepest economic slump on record in the second quarter as its battle against the coronavirus pandemic paralyzed business activity, official data showed on Thursday.

Gross domestic product contracted a seasonally adjusted 12.2% quarter-on-quarter, its sharpest quarterly contraction on record and largely in line with forecasts of a 12.8% decline from economists polled by Reuters.

The Reserve Bank of New Zealand (RBNZ) had forecast a quarterly and annual GDP decline of 14% in its August statement.

Weekly Forecast

Economists say the GDP data will have little impact on RBNZ policy, which is expected to hold interest rates at a record low of 0.25% at its meeting on September 23.

Economists are also saying that New Zealand will bounce back faster, while other nations are still struggling to contain the coronavirus. Some are saying that the June quarter’s record-breaking GDP decline will be followed by a record-breaking rise in the September quarter. However, the Treasury says that while New Zealand’s response to COVID-19 helped lessen the short-term economic shock, massive debt and continuing disruptions will delay a full recovery.

The AUD/USD could struggle this week as interest rate futures are still almost fully pricing in a 15 basis point rate cut in October. The Aussie has meandered since hitting a two-year high at .7414 on September as market pricing shifted rapidly in favor of a cut to the cash rate to 0.1% after its September policy meeting.

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

Geopolitics Keeps the Pound and the Dollar in Focus, with Lagarde to Test the EUR Later

Earlier in the Day:

It’s was a relatively start to the day on the economic calendar this morning. There were no material stats to provide direction in the early part of the day.

While the PBoC was in action, there was little market reaction to Beijing’s threat of retaliatory measures from the weekend was the key driver.

Beijing’s threat came in response to the U.S administration’s targeting of TikTok and WeChat. It had started long before, however, with the targeting of Huawei and CFO Meng Wanzhou.

Out of China

The PBoC held the 1-year and 5-year loan prime rates steady at 3.85% and 4.65% respectively. This was in line with forecasts and recent forward guidance from the PBoC.

Economic data from China has continued to support an in-country driven economic recovery.

The Aussie Dollar moved from $0.73066 to $0.73058 upon release of the PBoC decision. At the time of writing, the Aussie Dollar was up by 0.25% to $0.7307.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% ¥104.43 against the U.S Dollar, with the Kiwi Dollar up by 0.21% to $0.6773.

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 direction.

Through the early part of the day, the latest COVID-19 numbers and U.S – China tensions will be in focus.

Late in the European session, ECB President Lagarde is scheduled to speak. There are unlikely to be too many surprises, however.

At the time of writing, the EUR was up by 0.15% to $1.1858.

For the Pound

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

The lack of stats will leave the Pound firmly in the hands of Brexit and the passage of the Internal Market Bill.

At the time of writing, the Pound was up by 0.29% to $1.2954.

Across the Pond

It’s a quiet day ahead for the U.S Dollar. There are also no material stats from the U.S to provide the Greenback with direction.

The lack of stats will leave the Dollar in the hands of chatter from Beijing and Capitol Hill. Any news COVID-19 concerns will also influence ahead of FED Chair Powell’s testimony in the week.

The Dollar Spot Index was down by 0.09% to 92.838 at the time of writing.

For the Loonie

It’s a quiet day ahead, with August new house price figures due out later today.

Don’t expect too much influence from the numbers, however. Any renewed tensions between the U.S and China could question China’s willingness to crank up the import of U.S goods. Such an outcome would not bode well for global trade terms and crude oil prices.

At the time of writing, the Loonie was up by 0.18% to C$1.3180 against the U.S Dollar.

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

The Week Ahead – Private Sector PMIs, Powell, Geopolitics, and COVID-19 in Focus

On the Macro

It’s a particularly quiet week ahead on the economic calendar, with just 32 stats in focus in the week ending 25th September. In the week prior, 69 stats had been in focus.

For the Dollar:

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

Key stats include prelim private sector PMI numbers for September on Wednesday.

Expect the services PMI to have the greatest impact ahead of the all-important weekly jobless claims on Thursday.

Wrapping up the week, durable and core durable goods orders for August will also influence.

For the markets, it is all about momentum. Any weak numbers will test the demand for riskier assets.

On the monetary policy front, FED Chair Powell is also back in action, giving testimony on Capitol Hill. Following last week’s FOMC press conference, however, will there be any more surprises?

The Dollar Spot Index ended the week down by 0.44% to 92.926.

For the EUR:

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

In a quiet start to the week, Eurozone flash consumer confidence figures are due out on Tuesday. The EUR will likely respond to the numbers ahead of a busy Wednesday.

Consumer confidence and spending remain key to any economic recovery across the Eurozone. Any weak numbers would test support for the EUR.

The focus will then shift to the busy Wednesday.

September’s prelim private sector PMIs for France, Germany, and the Eurozone are due out. Alongside the figures, Spanish GDP and German consumer confidence figures are also in focus on Wednesday.

The focus will then shift to September’s Ifo Business Climate and sub-index figures due out on Thursday.

While we can expect the private sector PMIs to be the key drivers, both business and consumer confidence will need to improve.

Concerns over economic speed bumps will raise EUR sensitivity to the stats in the week.

On the monetary policy front, ECB President Lagarde is due to speak on Monday. Expect any references to inflation or exchange rates and the economic outlook to influence.

The EUR/USD ended the week down by 0.05% to $1.1840.

For the Pound:

It’s a quieter week ahead on the economic calendar. September’s prelim private sector PMIs, due out on Wednesday, will be the key driver.

Following last week’s BoE forward guidance and chatter on Brexit, the Pound will be sensitive to the numbers.

CBI Industrial Trend Orders are also due out but will likely have a muted impact, barring dire numbers.

On the monetary policy front, BoE Governor Bailey is scheduled to speak on Thursday. Any further chatter on negative rates and a gloomy economic outlook would weigh on the Pound.

The GBP/USD ended the week down by 0.95% to $1.2917.

For the Loonie:

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

House price figures for August are due out that will likely have a muted impact on the Loonie.

Expect the private sector PMIs from the Eurozone and the U.S and market risk sentiment to be key drivers.

Geopolitics and COVID-19 will influence market risk sentiment in the week.

The Loonie ended the week down by 0.19% to C$1.3204 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

That leaves the Aussie in the hands of geopolitics and the global economic outlook influenced by the PMIs.

The Aussie Dollar ended the week up by 0.07% to $0.7289.

For the Kiwi Dollar:

It’s a relatively quiet week ahead on the economic calendar but an important one for the Kiwi Dollar.

Key stats include August trade figures due out on Thursday. We’ve seen plenty of sensitivity to China numbers of late, so expect the devil to be in the details.

Earlier in the week, however, is the RBNZ monetary policy decision on Wednesday. There had been the talk of negative rates. Will there be action or just some more chatter? Economic indicators have yet to impress despite all of the support.

The Kiwi Dollar ended the week up by 1.40% to $0.6759.

For the Japanese Yen:

It is a quiet week ahead on the economic calendar.

Prelim private sector PMI numbers for September will be in focus mid-week. Other than that, there are no stats to consider, leaving the Yen in the hands of geopolitics and COVID-19 news.

On the monetary policy front, BoJ monetary policy meeting minutes will likely have a muted impact. The minutes are dated following last week’s monetary policy decision.

The Japanese Yen ended the week up by 1.50% to ¥104.57 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead on the economic data front.

There are no material stats due out of China, leaving geopolitics in focus in the week.

On the monetary policy front, the PBoC is in action on Monday. We don’t expect any further cuts in Loan Prime Rates, however. PBoC forward guidance and recent economic data support a hold.

The Chinese Yuan ended the week up 0.95% to CNY6.7692 against the U.S Dollar.

Geo-Politics

UK Politics

The Pound found much-needed support last week. Brexit will remain a key driver in the week ahead, however. We have the House of Lords vote on the Internal Market Bill that could throw Brexit negotiations into chaos. Last week, the British PM attempted to soften the impact of the internal market bill. An amendment to the bill was made to prevent ministers from using the bill to override the Brexit Withdrawal Agreement without a parliamentary vote.

It will get interesting as, while this may have placated some of Johnson’s critics, it may not satisfy the EU…

All in all, it spells for a choppy week ahead for the Pound.

U.S – China

Last week, Trump hit TikTok and WeChat. From the weekend, news hit the wires of Beijing taking retaliatory steps in response.

China issued a warning stating that if the U.S insists on going its own way, China would take the necessary steps to protect the rights and interests of Chinese firms.

We can expect more in the week ahead, particularly with Trump trailing Biden in the polls…

U.S Politics

Presidential Election fever should start to pick up and begin to have a greater influence on the global financial markets.

Trump has yet to claw back the deficit that Biden has enjoyed since COVID-19 reached U.S shores.

Expect Trump’s distraction tactics to draw plenty of attention.

The Weekly Wrap – Central Banks, COVID-19, and Geopolitics Tested the Markets

The Stats

It was a busier week on the economic calendar, in the week ending 18th September.

A total of 69 stats were monitored, following 41 stats from the week prior.

Of the 69 stats, 39 came in ahead forecasts, with 19 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 31 of the stats also reflected an upward trend from previous figures. Of the remaining 38, 32 stats reflected a deterioration from previous.

For the Greenback, it was back into the red, after 2 consecutive weeks in the green. In the week ending 18th September, the Dollar Spot Index fell by 0.44% to 92.926. In the week prior the Index had risen by 0.66% to 93.333.

Central bank chatter ultimately left the Dollar on the back foot as the FED delivered a more dovish than expected set of projections.

Out of the U.S

It was a busier week on the economic data front.

Early in the week, key stats included August industrial production, retail sales, and NY Empire State Manufacturing numbers for September.

It was a mixed bag for the Dollar, on the data front.

While the September manufacturing sector activity picked up in New York State, retail sales and industrial production disappointed.

In August, core retail sales rose by just 0.7%, following a 1.3% increase in July. Economists had forecast a 0.9% rise.

Industrial production rose by just 0.4%, following a 3% increase in July. The stats supported the view that the economic recovery had lost some of its vigor.

On Wednesday, however, it was the FOMC monetary policy decision and economic and interest rate projections that delivered the blow.

The FOMC projected that interest rates would be close to zero through to 2023, delivering a pessimistic outlook on the economic recovery.

A much-hoped-for V-shaped economic recovery would certainly not justify close to zero rates for such a length of time…

In the 2nd half of the week, the weekly jobless claims and Philly FED manufacturing numbers also failed to impress.

While claims eased back from 893k in the previous week to sit at 860k in the week ending 11th September, economists had been more hopeful.

Manufacturing sector activity also slowed marginally in Philly, which was an added negative on the day.

At the end of the week, prelim September consumer sentiment figures provided some comfort. The Michigan Consumer Sentiment Index rose from 74.1 to 78.9. While up in the month, however, sentiment remained well below pre-pandemic levels and a current year high 101.0.

In the equity markets, the NASDAQ and S&P500 fell by 0.56% and by 0.64% respectively. The Dow ended the week down by just 0.03%.

Out of the UK

It was another busy week on the economic calendar.

Employment and inflation figures drew attention in the 1st half of the week. It was a mixed set of numbers, however.

Claimant counts rose by 73.7k in August. While coming in below a forecasted 100k rise, it was up from a 69.9k rise in July.

The unemployment rate ticked up from 3.9% to 4.1% in July, with the claimant counts suggesting a further uptick ahead. For UK labor market conditions, an end to the and likely surge in unemployment remains a key risk to the Pound… With the government having to introduce containment measures, however, there are hopes of an extension to the scheme.

Inflation came in ahead of forecasts though also painted a grim picture. The annual rate of inflation softened from 1.0% to 0.2%, with consumer prices falling by 0.4% in August. In July consumer prices had risen by 0.4%.

On Thursday, the focus then shifted to the BoE and the MPC’s September monetary policy decision. A dovish monetary policy report and the chatter of negative rates sank the Pound on the day.

Wrapping things up on Friday were retail sales figures, which continued to rise in August. The monthly increase was well below July numbers, however, placing further question markets over the pace of the economic recovery.

In August, retail sales increased by 0.8%, month-on-month, following a 3.7% jump in July. Economists had forecast a 0.7% increase.

Away from the economic calendar, the Pound had found much-needed support after last week’s tumble. Resistance against Boris Johnson’s Internal Market Bill provided support in spite of the bill making it through the House of Commons.

In the week, the Pound rose by 0.95% to $1.2917. In the week prior, the Pound had tumbled by 3.64% to $1.2796

The FTSE100 ended the week down by 0.42%, following a 4.02% rally from the previous week.

Out of the Eurozone

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

Key stats included industrial production and trade figures for the Eurozone and economic sentiment figures for Germany and the Eurozone.

The stats were skewed to the positive for the EUR.

Industrial production saw another solid rise in July, with the Eurozone’s trade surplus widening.

More importantly, however, was a pickup in economic sentiment in September.

Other stats included finalized inflation figures and wage growth for the Eurozone. The stats had a muted impact on the EUR, however.

For the week, the EUR fell by 0.05% to $1.1840. In the week prior, the EUR had risen by 0.07% to $1.1846.

For the European major indexes, it was a mixed week. The CAC40 and DAX30 fell by 1.11% and by 0.66% respectively, while the EuroStoxx600 rose by 0.22%.

For the Loonie

It was a relatively quiet week on the economic calendar.

Key stats included August inflation and July retail sales figures.

It was a mixed bag on the day front. While there was a pickup in core inflationary pressures in August, core consumer prices stalled in August. Consumer prices fell unexpectedly in the month, adding pressure on the Loonie.

At the end of the week, retail sales also failed to impress. In July, core retail sales fell by 0.4%, with retail sales rising by just 0.6%. In June, core retail sales had surged by 15.5% and retail sales by 22.7%.

The Loonie fell by 0.19% to end the week at C$1.3204. In the week prior, the Loonie had fallen by 0.90%.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 18th September, the Aussie Dollar rose by 0.07% to $0.7289, with the Kiwi Dollar rallying by 1.40% to $0.6759.

For the Aussie Dollar

It was another quiet week for the Aussie Dollar on the economic calendar.

Key stats including August employment figures that delivered the Aussie much-needed support.

Full-employment rose by 36.2k, with employment jumping by another 111.0k in August. Improving employment conditions is key for the RBA’s hope of a consumption-driven economic recovery.

On the monetary policy front, the RBA minutes early in the week failed to deliver the talk of further support, supporting a closeout at $0.73 levels on the day.

The risk-off sentiment at the end of the week left the Aussie Dollar flat, however.

For the Kiwi Dollar

It was also a quieter week on the economic calendar.

Key stats included 3rd quarter consumer sentiment figures and 2nd quarter GDP numbers.

It was a mixed set of numbers, in spite of GDP numbers coming in ahead of forecasts.

Consumer sentiment took a hit in the 3rd quarter, with the Westpac consumer sentiment index falling from 97.2 to 95.1.

In the 2nd quarter, the New Zealand economy contracted by a record 12.2%. Economists forecasted a contraction of 12.8%. In the 1st quarter, the economy had contracted by 1.4%.

In spite of the negative numbers, the Kiwi managed to claw back some of its recent losses in response to the FED’s projections.

For the Japanese Yen

It was another busy week on the economic calendar.

Key stats included August trade and inflation figures, which were skewed to the negative.

While Japan’s trade surplus unexpectedly widened from ¥10.9bn to ¥248.3bn, it was a larger slide in imports that cause the widening. Exports slid by 14.8%, with imports tumbling by 20.8%, delivering a grim view on trade terms.

At the end of the week inflation figures were also of little comfort. The annual rate of core inflation was down 0.4% after having stalled in July.

On the monetary policy front, the BoJ left policy unchanged in spite of some quite dire indicators out of Japan of late.

The Bank did state, however, that the Japanese economy was in a serious condition.

The Japanese Yen rose by 1.50% to ¥104.57 against the U.S Dollar. In the week prior, the Yen had risen by 0.08%.

Out of China

It was another relatively busy week on the economic data front.

Key stats included August’s industrial production, retail sales and unemployment figures.

The stats were skewed to the positive, supporting riskier assets before the FED’s fueled pull back.

Retail sales rose by 0.5%, partially reversing a 1.1% slide from July. Industrial production jumped by 5.6%, year-on-year, picking up from a 4.8% rise in July.

Supporting Beijing’s call for a home fueled economic recovery, the unemployment rate slipped from 5.7% to 5.6%.

In the week ending 18th September, the Chinese Yuan rose by 0.95% to CN6.7692. In the week prior, the Yuan had risen by 0.12%.

The CSI300 rose by 2.37%, while the Hang Seng fell by 0.20% to log a 3rd consecutive week in the red.

NZD/USD Forex Technical Analysis – Trader Reaction to .6791 Sets the Tone

The New Zealand Dollar is trading higher on Friday amid renewed concerns over the strength of the U.S. economy. Traders are also shrugging off yesterday’s data that showed New Zealand suffered its worst economic slump since the Great Depression in the second quarter as a strict nationwide lockdown to combat the coronavirus brought the country to a standstill.

At 06:38 GMT, the NZD/USD is trading .6795, up 0.0040 or +0.59%.

The Kiwi is also being supported by a weaker U.S. Dollar two days after the Federal Reserve pledged to keep interest rates low for a prolonged period to lift the world’s biggest economy out of a pandemic-induced recession.

Concerns around a stalling recovery are being driven by the Labor Department’s report from Thursday that showed the number of Americans filing new claims for unemployment benefits fell last week, but remained perched at extremely high levels.

Traders have also become concerned that the Fed is out of ammunition. Furthermore, some think the Fed’s message this week indicates major concerns about the economy.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was confirmed earlier today when buyers took out the September 2 main top at .6789. The new main bottom is .6601. A trade through this bottom will change the main trend to down.

The minor trend is also up. The new minor bottom is .6675. Taking out this level will change the minor trend to down and shift momentum to the downside.

Short-Term Outlook

The NZD/USD is up seven sessions from its last main bottom. This puts the Forex pair inside the window of time for a potentially bearish closing price reversal top. Therefore, our focus will be on yesterday’s close at .6755.

Bullish Scenario

A sustained move over .6755 will indicate the presence of buyers. Taking out the July 19, 2019 main top at .6791 will indicate the buying is getting stronger. This could lead to an extended rally with the March 21, 2019 main top at .6939 the next major upside target.

Bearish Scenario

A sustained move under .6755 will put the NZD/USD in a position to post a closing price reversal top. This won’t change the trend to down, but if confirmed, it could lead to a 2 to 3 day correction.

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

Economic Data and Geopolitics Put the Loonie and the Pound in the Spotlight

Earlier in the Day:

It’s was a quieter start to the day on the economic calendar this morning. The Japanese Yen was in action.

For the Japanese Yen

In August, the annual core rate of inflation fell by 0.4% in August, which was in line with forecasts. Inflation had stalled in July.

According to the Ministry of Internal Affairs and Communication, the annual rate of inflation softened from 0.3% to 0.2% in August.

The Japanese Yen moved from ¥104.724 to ¥104.731 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.02% ¥104.72 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.18% to $0.7326, with the Kiwi Dollar up by 0.33% to $0.6777.

The Day Ahead

For the EUR

It’s another relatively quiet day ahead on the economic calendar. Key stats include August wholesale inflation figures for Germany.

Following the Eurozone’s figures from Thursday, disappointing numbers would be a test for the EUR early in the day.

Away from the economic calendar, however, market risk sentiment will remain a key driver on the day. Brexit and concerns over the global economic recovery will likely linger if economic data disappoints through the day.

At the time of writing, the EUR was up by 0.07% to $1.1856.

For the Pound

It’s a busy day ahead on the economic calendar, with August retail sales figures in focus later this morning.

Following the BoE’s uncertain outlook on the economy and the talk of negative rates, we can expect Pound sensitivity to the numbers.

With the UK government having to reintroduce containment measures and Brexit uncertainty ever-present, the Pound remains under pressure.

On the Brexit front, updates on the passage of the Internal Market Bill will also continue to influence.

At the time of writing, the Pound was up by 0.08% to $1.2984.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. Key stats include prelim September consumer sentiment figures from the U.S.

With the FED’s dovish outlook on the economy, a pickup in consumer sentiment at the end of the quarter would ease the pain.

Away from the economic calendar, geopolitics will also influence.

The Dollar Spot Index was down by 0.10% to 92.877 at the time of writing.

For the Loonie

It’s a busier day ahead, with August retail sales and wholesale sales figures in focus later today.

We can expect the retail sales figures to be the key driver on the day.

Barring impressive numbers, however, expect the recently dovish central bank chatter to limit any upside.

At the time of writing, the Loonie was up by 0.08% to C$1.3156 against the U.S Dollar.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – Traders Fade Economic Data, Focus Remains on Risk Appetite

The Australian and New Zealand Dollars are trading lower on Thursday following the release of key economic reports. Both currencies are still feeling pressure from yesterday’s surge in the U.S. Dollar following the release of several major announcements from the U.S. Federal Reserve. Basically, the Fed vowed to keep interest rates low for a long time while battling low inflation and a sluggish labor market.

At 16:30 GMT, the AUD/USD is trading .7283, down 0.0021 or -0.29% and the NZD/USD is at .6731, down 0.0001 or -0.01%.

Australian Dollar

The Australian Dollar briefly surged on strong jobs data but retraced its gains as the currency was swamped by a firmer U.S. Dollar.

Australia’s jobless rate unexpectedly slipped from a 22-year high in August as employment surged past expectations helped by part-time work, but the economic toll from the pandemic has hit young job seekers hard.

The country’s overall jobless rate fell to 6.8% in August as employment skyrocketed by 111,000, Australian Bureau of Statistics (ABS) data showed on Thursday. That was better than economists’ forecasts of 7.7% and a 50,000 fall in jobs in a Reuters poll.

But the figures were less positive for 15 to 24 year olds, with the unemployment rate now hovering near 20%, more than three times the national tally. During the 2008/09 global financial crisis, the rate was 10%-12%.

New Zealand Dollar

New Zealand fell into its deepest economic slump on record in the second quarter as its battle against the coronavirus pandemic paralyzed business activity, official data showed on Thursday.

Gross Domestic Product contracted a seasonally adjusted 12.2% quarter-on-quarter, its sharpest quarterly contraction on record and largely in line with forecasts of a 12.8% decline from economists polled by Reuters. GDP fell 12.4% year-on-year.

The Reserve Bank of New Zealand had forecast a quarterly and annual GDP decline of 14% in its August statement.

Daily Forecast

There was little reaction to the jobs reports and GDP data because the direction of the Aussie and Kiwi at this time is being primarily driven by risk sentiment. With U.S. equity markets trading lower, it’s going to be hard to bullish.

Additionally, the data didn’t really surprise anyone and most economists are calling for the Australia and New Zealand economies to bounce back strong during the third quarter.

Monetary Policy and Economic Data Put the Pound and the Dollar in Focus

Earlier in the Day:

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

For the Kiwi Dollar

2nd quarter GDP numbers were in focus this morning, as the markets look ahead to next week’s RBNZ policy decision.

In the 2nd quarter, the economy contracted by a record 12.2%, quarter-on-quarter, following a revised 1.4% contraction in the 1st quarter. Economists had forecast a 12.8% contraction.

According to NZ Stats,

  • New Zealand started the June 2020 quarter in alert level 4 lockdown, with restrictions on the activities of households and businesses.
  • Social distancing controls eased on 8th June while NZ borders remained closed in the quarter.
  • Industries including retail, accommodation & restaurants, and transport saw significant deterioration.
  • Other industries such as food and beverage and manufacturing were essential services and less affected.
  • Household spending in the quarter tumbled by 12.1%.

The Kiwi Dollar moved from $0.67337 to $0.67361 upon release of the numbers. At the time of writing, the Kiwi Dollar was down by 0.59% to $0.6693.

For the Aussie Dollar

Total employment increased by 111.0K in August, following a 114.7k rise in July, Economists had forecast a 50.0k fall.

Full employment rose by 36.2%, following a 43.5k increase in July. In July, the unemployment rate slid from 7.5% to 6.8%. Economists had forecast an unemployment rate of 7.7%. In July, the unemployment rate had risen from 7.4% to 7.5%.

According to the ABS,

  • The number of unemployed people decreased by 86,500 people.
  • Compared to July 2019, full-time employment declined by 234,200, with part-time employment falling by 104,100.
  • The employment to population ratio increased by 0.5 points to 60.3%.
  • While the unemployment rate fell, the participation rate increased by 0.1 points to 64.8%.

The Aussie Dollar moved from $0.72816 to an early high $0.73112 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.41% to $0.7276.

For the Japanese Yen

The Bank of Japan left interest rates unchanged, which was in line with market expectations. Next up, the all-important press conference.

The Japanese Yen moved from ¥105.046 to ¥105.069 upon the BoJ policy decision. At the time of writing, the Japanese Yen was down by 0.10% ¥105.06 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include finalized August inflation figures for the Eurozone.

Barring marked deviation from prelim figures, the stats should have a muted impact on the EUR.

Expect market reaction to the FOMC economic and interest rate projections and press conference to continue to influence.

Closer to home, Brexit chatter and the BoE will also be of influence on the day.

At the time of writing, the EUR was down by 0.44% to $1.1764.

For the Pound

It’s not a busy day ahead but a big day ahead on the economic calendar. While there are no material stats due out of the UK, the BoE will deliver its September monetary policy decision this afternoon.

Recently gloomy chatter has raised the prospect of some dovish commentary and the possible talk of further support. With Brexit yet to have a clear path and the UK reintroducing containment measures, plenty of uncertainty remains.

It remains to be seen, however, whether there will be the promise of a near-term move. The vote count may be the 1st clue. Expect any dissent in favor of a rate cut to pressure the Pound.

The monetary policy meeting minutes will be the key guidance on what lies ahead, however.

On the Brexit front, updates on the passage of the Internal Market Bill will also influence.

At the time of writing, the Pound was down by 0.34% to $1.2923.

Across the Pond

It’s also a relatively busy day ahead for the U.S Dollar. Key stats include September Philly FED Manufacturing Index numbers and the all-important weekly jobless claims figures.

While we have seen market sensitivity to the Philly numbers, expect the jobless claims numbers to have the greatest impact.

Other stats include August building permit and housing start numbers. We would expect the stats to have a muted impact on the Dollar, however.

Away from the economic calendar, geopolitics will also influence.

The Dollar Spot Index was up by 0.26% to 93.452 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of geopolitics and continued reaction to the FED.

At the time of writing, the Loonie was down by 0.37% to C$1.3227 against the U.S Dollar.

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

Economic Data Puts the GBP, Loonie, and USD in Focus Ahead of the FOMC…

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.

For the Kiwi Dollar

Current account figures for the 2nd quarter were in focus. Quarter-on-quarter, the current account surplus widened from NZ$1.56bn to NZ$1.83bn. Economists had forecast a narrowing to NZ$0.60bn.

Year-on-year, the current account deficit narrowed from NZ$8.51bn to NZ$5.77bn. Economists had forecast a narrowing to NZ$7.37bn.

The current account as a percentage of GDP stood at -1.9% in the 2nd quarter. This was up from -2.7% in the 1st quarter. Economists had forecast a percentage of GDP of -2.5%.

The Kiwi Dollar moved from $0.67124 to $0.67128 upon release of the numbers. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.6715.

For the Japanese Yen

In August, Japan’s trade surplus widened from ¥10.9bn to ¥248.3bn. Economists had forecast a deficit of ¥77.6bn.

According to figures released by the  Ministry of Finance,

  • In August, exports slid by 14.8%, year-on-year.
    • While exports to Asia fell by 7.8%, exports to China rose by 5.1%.
    • A 4% fall in exports to HK, a 13.8% fall to South Korea, a 31.3% slump in exports to Thailand, and a 26.1% decline to Singapore weighed.
    • Exports to Australia slumped by 20.9%, with exports to the U.S tumbling by 21.3%.
    • Things were not much better to Europe, with exports to Western Europe sliding by 15.3%.
  • Imports tumbled by 20.8% in August, year-on-year.
    • While imports from Asia fell by 11.2%, imports from Australia tumbled by 43.4%.
    • Imports from the U.S slid by 22%, with imports from Europe falling by 22.2%.

The Japanese Yen moved from ¥105.402 to ¥105.308 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.14% ¥105.29 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.03% to $0.7305.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include July trade data for the Eurozone.

We don’t expect too much influence on the EUR, however, barring particularly dire numbers.

On the day, the monetary policy and geopolitics will be key drivers. Brexit will be a key area of interest, with the FOMC policy decision and economic and interest rate projections of particular interest.

We saw the Dollar tumble in response to the lower for longer and policy framework revision. Following last week’s ECB press conference, a dovish FED could see the EUR head back towards $1.20 levels.

At the time of writing, the EUR was down by 0.05% to $1.1841.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Key stats include August inflation figures.

While consumer prices will influence, expect wholesale inflation figures to have a greater impact early in the day.

Away from the economic calendar, Brexit will remain the key driver, however. There’s been plenty of chatter over the Internal Market Bill and the PM’s desire to protect Northern Ireland from the EU.

Any further updates will be of influence as the Internal Market Bill gets sliced and diced in Westminster.

At the time of writing, the Pound was up by 0.09% to $1.2900.

Across the Pond

It’s also a relatively busy day ahead for the U.S Dollar. Key stats include August retail sales figures.

Expect the numbers to influence risk sentiment ahead of the main event. Consumer spending is a key contributor and will need to continue to rebound to support the economic recovery.

The main event of the day is the FOMC monetary policy decision, however. With the FOMC expected to stand pat, the market focus will be on the FOMC economic and interest rate projections.

Following the announcement of the new monetary policy framework, the markets are expecting interest rate forecasts to remain dovish.

The FOMC’s outlook on the economic recovery is an area of uncertainty…

The Dollar Spot Index was up by 0.12% to 93.166 at the time of writing.

For the Loonie

It’s a busier day ahead, with key stats including August inflation and July Foreign Securities Purchases figures.

Expect the inflation figures to have the greatest impact on the day.

We will also expect the weekly crude oil inventory numbers to also provide direction.

At the time of writing, the Loonie was up by 0.02% to C$1.3183 against the U.S Dollar.

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

Economic Data and Brexit to Keep the Pound Front and Center

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 this morning.

On the geopolitical risk front, U.S – China tensions remained in focus. TikTok’s sale deadline is up, with Huawei entering a new era under the watchful eye of the U.S administration.. From midnight on Monday, suppliers now require an approved license to supply Huawei. This not only impacts U.S suppliers but also Huawei’s Asian suppliers including Taiwan Semiconductor Manufacturing Co. All non-U.S suppliers that use American tech will be required to apply for a license to continue supplying Huawei.

For the Kiwi Dollar

The Westpac Consumer Sentiment Index fell from 97.2 to 95.1 for the 3rd quarter.

According to the 3rd quarter survey,

  • Sentiment slipped back to levels last seen during the 2008 Financial Crisis.
  • An increasing number of households are reporting a deterioration in their financial position. The current financial situation sub-index fell from -13.2 to -16.9.
  • Low levels of confidence are weighing on spending appetites, seen across all age groups and income brackets. This was reflected in the “Good time to Buy” sub-index which fell from 1.5 to -2.5.
  • The expected financial situation sub-index fell from 14.7 to 11.2, to fall below the long-run average 11.4.
  • For the economic outlook, the 1-year economic outlook sub-index rose from -28.3 to -26.3.
  • By contrast, the 5-year economic outlook sub-index fell from 11.6 to 9.9, sitting well below the long-run average 28.8.

The Kiwi Dollar moved from $0.67001 to $0.66942 upon release of the numbers. At the time of writing, the Kiwi Dollar was flat at $0.6700.

For the Aussie Dollar

In the 2nd quarter, the House Price Index fell by 1.8%, reversing a 1.6% rise from the 1st quarter. Economists had forecast a 1% decline.

Key this morning, however, was the release of the RBA meeting minutes.

Salient points from the RBA Minutes included:

  • Growth in housing credit to owner-occupiers had eased in recent months, while housing credit to investors had continued to decline.
  • This was a reflection of demand from borrowers, given the weak and uncertain economic environment.
  • Members noted that, in addition to weak demand for household and business borrowing, the supply of credit had also tightened.
  • While an economic recovery was underway, it was likely to be uneven.
  • Uncertainty about the health situation and the future path of the economy was continuing to affect the spending plans of households and businesses.

On the monetary policy front,

  • Members reviewed the operation of the TFF and agreed to increase the size and to allow the drawing of funds until June 2021.
  • They also considered it likely that fiscal and monetary policy support would be required for some time given the outlook for the economy and the labor market.
  • Affirming its commitment to support jobs, incomes, and businesses, the Board agreed to maintain highly accommodative settings as long as required.
  • The Board will also continue to consider how further monetary policy measures could support the recovery.

The Aussie Dollar moved from $0.72731 to $0.72982 upon release of the stats and the minutes. At the time of writing, the Aussie Dollar was up by 0.26% to $0.7307.

Out of China

Key stats included fixed asset investment and retail sales figures for August. Fixed asset investment and unemployment figures were also in focus.

Fixed asset investments fell by 0.3%, year-on-year, following a 1.6% decline in July. Economists had forecast a 0.4% decline.

Industrial production rose by 5.6%, following a 4.8% rise in July. Economists had forecast a 5.1% increase, year-on-year.

Retail sales rose by 0.5% in August, year-on-year, following a 1.1% decline in July. Economists had forecast a 0.1% rise.

Finally, the unemployment rate fell from 5.7% to 5.6%.

The Aussie Dollar moved from $0.7304. to $0.7312 upon release of the stats.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.08% ¥105.65 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include September ZEW Economic Sentiment figures for Germany and the Eurozone.

2nd quarter wage growth figures for the Eurozone and finalized inflation figures for France and Italy are also in focus. We would expect these stats to have a muted impact on the EUR, however.

Expect the Economic Sentiment figures to be the key drivers on the day.

At the time of writing, the EUR was up by 0.08% to $1.1875.

For the Pound

It’s a particularly busy day ahead on the economic calendar. Key stats include August claimant counts and July’s unemployment rate.

Average earnings and 3-month rolling employment change figures are also due out but likely to have a muted impact on the Pound.

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

At the time of writing, the Pound was down by 0.11% to $1.2832.

Across the Pond

It’s also a relatively busy day ahead for the U.S Dollar. Key stats include August industrial production figures and September NY Empire State Manufacturing Index numbers.

Other stats include August import and export price index numbers that will have a muted impact on the day.

With the markets a little edgy over the sustainability of the economic recovery, expect dire numbers to drive demand for the safe havens.

On the geopolitical risk front, there’s also chatter from Beijing and Washington to muddy the waters.

The Dollar Spot Index was down by 0.04% to 93.011 at the time of writing.

For the Loonie

It’s another quiet day ahead, with key stats limited to July manufacturing sales figures.

The stats are unlikely to have an impact on the Loonie, leaving the IEA’s monthly report to provide direction.

From elsewhere, expect stats from China and the U.S and geopolitics to also provide direction on the day.

At the time of writing, the Loonie was up by 0.12% to C$1.3160 against the U.S Dollar.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Could Weaken if RBA Minutes Hint at Easing in October

The Australian and New Zealand Dollars are edging lower early Tuesday ahead of the release of the Reserve Bank of Australia (RBA) monetary policy minutes. The Aussie came under pressure as odds narrowed for further monetary policy easing by the country’s central bank. On September 1, the Aussie hit a two-year high, but has since retreated from this level as market pricing shifted rapidly for a cut to the cash rate to 0.1%.

At 01:01 GMT, the AUD/USD is trading .7272, down 0.0016 or -0.22% and the NZD/USD is at .6695, down 0.0005 or -0.08%.

Interest rate futures are almost fully pricing in a 15 basis point rate cut at the Reserve Bank of Australia’s (RBA) October 6 policy meeting.

The RBA last cut the cash rate to an all-time low of 0.25% in an emergency meeting in March and has repeatedly said the benefits of taking rates deeper into record territory were limited.

But at its September board meeting, Governor Philip Lowe hinted at additional policy measures to support an economy reeling from its worst contraction in almost a century.

This remark stoked speculation of further easing.

RBA Minutes Expectations

The market is now awaiting minutes of the RBA’s September 1 policy meeting due out at 01:30 GMT for clues about its future course of action.

A consensus of traders think the minutes may show policymaker discussion on any further tweaks to policy the RBA is considering.

This assessment is based on a news story in the Australian Financial Review over the weekend that said the RBA was contemplating further policy easing, including an expanded bond buying program and possibly lowering the cash rate.

New Zealand Dollar Underpinned by COVID-19 Lockdown Easing Hopes

The NZD/USD is being underpinned partly on news the country would lift coronavirus restrictions across the country on September 21.

“NZD’s outperformance can probably be partly attributed to news that the NZ Government is looking at easing virus restrictions, although we suspect the AUD/NZD underperformance played a bigger role on the flying kiwi amid selling pressures on the cross,” NAB senior Forex strategist Rodrigo Catril wrote in a note.

Short-Term Outlook

The RBA minutes could trigger a break in the AUD/USD if they confirm policymakers are looking at easing at the October 6 meeting.

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

A Quiet Day ahead of Busy Week Leaves the Majors in the Hands of Geopolitics

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. There were no material stats through the early part of the Asian session to provide the majors with direction.

On the geopolitical risk front, U.S – China tensions and the Liberal Democratic Party leadership election were in focus.

With TikTok’s sale deadline looming, Huawei is also in the spotlight. The telco’s suppliers are due to stop shipments after mid-night today. This not only impacts U.S suppliers but also Huawei’s Asian suppliers including Taiwan Semiconductor Manufacturing Co. All non-U.S suppliers that use American tech will be required to apply for a license to continue supplying Huawei.

For the Japanese Yen

Finalized industrial production figures for July are due out later today. Barring any marked downward revision to the prelim 8% jump, however, the stats should have a muted impact on the Yen.

This morning, Japan’s governing party is expected to vote in Yoshihide Suga, who is also expected to continue Abe’s policies. Any surprise outcomes would, therefore, be a test for the Yen…

At the time of writing, the Japanese Yen was up by 0.07% ¥106.09 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.01% to $0.7283, while the Kiwi Dollar was up by 0.41% to $0.6693.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. July industrial production figures are due out in the early part of the day.

With the markets having digested production figures from key member states, today’s data should have a muted impact on the EUR.

On the geopolitical risk front, however, expect Brexit and chatter from Beijing and Washington to influence.

At the time of writing, the EUR was up by 0.03% to $1.1850.

For the Pound

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

The lack of stats will leave the Pound in the hands of Brexit and market risk sentiment,

While Brexit chatter from the weekend was of little use for the bulls, talk of a resumption of COVID-19 vaccine trials was positive.

Over the weekend, the news wires reported that Oxford University is to resume clinical trials on its COVID-19 vaccine. Ultimately, however, with Brexit and economic doom and gloom, any upside would likely be limited.

At the time of writing, the Pound was up by 0.23% to $1.2825.

Across the Pond

It’s also a particularly quiet day ahead for the U.S Dollar. There are no material stats due out of the U.S to provide the greenback with direction

With a lack of stats to consider, chatter on TikTok, U.S and China relations, and Brexit will be key drivers.

The Dollar Spot Index was down by 0.16% to 93.183 at the time of writing.

For the Loonie

It’s another quiet day ahead, with no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of market risk sentiment and crude oil prices. OPEC’s monthly report is due out today. We’ve seen crude oil prices suffer of late as a result of demand concerns.

Negative projections on demand would be negative for the Loonie.

At the time of writing, the Loonie was up by 0.14% to C$1.3160 against the U.S Dollar.

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