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Economic Data and Brexit Keep the EUR, the USD and the GBP in Focus

Bob Mason

Earlier in the Day:

The economic calendar was on the busier side once more through the Asian session this morning.

For the Kiwi Dollar

Building consents fell by 1.3% in July, month-on-month, following on from a 4% fall in June. According to NZ Stats,

  • While consents were down for a 2nd consecutive month, the declines came off the back of a 15% jump in May.
  • Year-on-year, building consents rose by 8% in July.
  • The number of new homes consented hit 35,472 in the year ended July 2019. This was reportedly the most consented in a year since the mid-’70s.

The Kiwi Dollar moved from $0.63110 to $0.63122 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.17% to $0.6300.

For the Japanese Yen

Tokyo’s core annual rate of inflation eased from 0.9% to 0.7% in August, which was softer than a forecast of 0.8%. According to consumer price figures released by the Ministry of Internal Affairs and Communication,

  • Prices for transportation and communication continued to drag, with a 0.9% decline, with prices for medical care falling by 0.1%.
  • Prices for housing rose by just 0.4%, while prices for education rose by 0.7%.
  • Fuel, light and water charges rose by 1.7%. While softer than a 2.8% rise in July, continued to provide support.
  • Support also came from culture and recreation (+1.3%), clothes & footwear (+1.2%), and furniture & utensils (+3.4%).

The Japanese Yen moved from ¥106.513 to ¥106.508 upon release of the figures, which preceded retail sales and industrial production numbers.

Retail sales slid by 2% in July, year-on-year, according to the Ministry of Economy, Trade and Industry. In June, retail sales had risen by 0.5%.

Industrial production rose by 1.3% in July, month-on-month, according to prelim figures. Forecasts were for a 0.3% rise. In June, production had fallen by 3.3%

According to prelim figures released by Ministry of Economy, Trade and Industry,

  • Industries that mainly contributed to the increase were:
    • Motor vehicles
    • Chemicals (excl. inorganic, organic chemicals, and medicine)
    • Pulp, paper and paper products.
  • Industries that mainly contributed to a decreased were:
    • Inorganic and organic chemicals.
    • Petroleum and coal products.
    • Electrical machinery, and information and communication electronics.
  • Forecasts are for industrial production to fall by 1.6% in September.

The Japanese Yen moved from ¥106.480 to ¥106.489 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.09% to ¥106.42 against the U.S Dollar.

For the Aussie Dollar

Building approvals tumbled by 9.7% in July, month-on-month, following a 1.2% decline in June. Economists had forecast no change.

According to the ABS,

  • Private dwellings excluding houses tumbled by 18.4%, while private house approvals fell by 3.3%.
  • A 24.3% slide in approvals in Victoria and 17.5% fall in approvals in New South Wales weighed.

Private sector credit rose by 0.2% in July, month-on-month, following a 0.1% increase in June according to figures released by RBA. Economists had forecast a 0.2% rise.

Earlier in the session, the HIA released its new home sales figures for August. Sales fell by 7.2%, following a 12.4% slide, year-on-year, in July.

The Aussie Dollar moved from $0.67163 to $0.67108 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.22% to $0.6713.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Ahead of the European open, German retail sales and French prelim August inflation numbers are due out.

While softer inflation numbers would place further pressure on the EUR, a slide in German retail sales would be of greater significance.

Later in the session, the Eurozone’s prelim inflation figures and July unemployment rate will also provide direction. Unemployment would need to hold steady for the EUR to avoid a tumble.

Outside of the stats, geopolitics will continue to influence through the day. There’s Brexit, the U.S – China trade war and Italian politics to consider.

At the time of writing, the EUR was down by 0.07% to $1.1049.

For the Pound

It’s another quiet day ahead on the data front. Economic data is limited to August house price figures that will unlikely to have an impact on the Pound.

The market focus will continue to be on Brexit and whether Johnson will be prevented from suspending Parliament in less than 2-weeks.

British PM Johnson is reportedly looking to get talks going with the EU. The EU will need to reciprocate, however, for the Pound to find support.

At the time of writing, the Pound was flat at $1.2181.

Across the Pond

It’s a busy day on the economic calendar. Key stats due out of the U.S include the FED’s preferred Core PCE Price Index figures, personal spending, and Chicago PMI. Of less influence on the day will be finalized consumer sentiment numbers for August.

Outside of the stats, chatter from the Oval Office will need to be considered. While sentiment towards trade has improved, Trump will need to be market-friendly through the day to support the Dollar.

At the time of writing, the Dollar Spot Index was down by 0.01% to 98.498.

For the Loonie

It’s a busy day ahead on the economic calendar. GDP numbers and July’s RMPI figures are due out later today.

With the Bank of Canada monetary policy decision due next week, we can expect plenty of sensitivity to the numbers.

The Loonie was down by 0.09% at C$1.3299, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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