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Inflation, the FED and Boris Put the Loonie, the USD and the GBP in Focus

Bob Mason

Earlier in the Day:

It was another particularly quiet Asian session on the economic calendar through this morning. There were no material stats to provide the majors with direction.

It ultimately boils down to monetary policy, with the FOMC meeting minutes and the Jackson Hole Symposium key for the majors. The lack of stats left the markets to look ahead to the FOMC meeting minutes due out later this afternoon.

Also influencing sentiment on the day was trade war chatter. News of the U.S administration adding 46 Huawei-linked entities to the existing blacklist added fuel to the trade war fire.

The Majors

At the time of writing, the Aussie Dollar was flat at $0.6778. The Kiwi Dollar was down by 0.08% to $0.6411, with the Japanese Yen down by 0.13% to ¥106.37 against the U.S Dollar.

In the Asian equity markets, it was a sea of red across the majors, which tracked the European and U.S majors into the red.

At the time of writing, the ASX200 led the way down, falling by 0.86%. The Nikkei wasn’t far behind with a 0.6% decline.

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.

A lack of stats will leave the EUR exposed to Italian politics and any updates from Boris Johnson’s meeting with Merkel.

The EUR has continued to hold on in spite of disappointing economic data. Tonight’s FED minutes and tomorrow’s ECB minutes could change that…

At the time of writing, the EUR was down by 0.06% to $1.1093.

For the Pound

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

Focus on the day will be on Boris Johnson’s meeting with Angela Merkel. Merkel gave the Pound a boost on Tuesday after saying that she will be considering options to prevent Britain from a no-deal exit from the EU.

While it is unlikely that any progress will be made, positive updates will provide the Pound with further support. Johnson’s meeting with Macron tomorrow will be the testier one, however.

At the time of writing, the Pound was down by 0.02% to $1.2168.

Across the Pond

It’s a relatively quiet day on the economic calendar.  July existing home sales are due out of the U.S later this afternoon.

While forecasts are Dollar positive, we would expect the numbers to have a limited impact. The FOMC meeting minutes due out late in the day will be the key driver. Apprehension ahead of the release will likely limit any major Dollar moves.

At the time of writing, the Dollar Spot Index was up by 0.01% to 98.203.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. July inflation numbers are due out of Canada.

With the next BoC monetary policy decision 2-weeks away, today’s numbers will influence market sentiment towards BoC policy. Any pickup in inflationary pressure would provide some short-term support to the Loonie.

The extended trade war, talks of negative rates by a number of central banks and evidence of an economic slowdown all remain negatives, however.

The Loonie was down by 0.02% at C$1.3316, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire