Currency

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

Earlier in the Day:

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

For the Kiwi Dollar

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

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

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

According to NZ Stats,

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

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

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

According to the ANZ report,

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

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

For the Japanese Yen

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

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

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

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

Elsewhere

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

The Day Ahead:

For the EUR

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

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

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

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

For the Pound

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

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

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

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

Across the Pond

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

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

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

For the Loonie

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

Expect the retail sales figures to have the greatest influence.

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

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

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