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The Yen and Loonie Rally, with Boris Johnson and the GBP in Focus Later

Bob Mason

Earlier in the Day:

The economic calendar was on the lighter side through the Asian session this morning, with Japan on Holiday.

Economic data included fixed asset investment, industrial production, retail sales, and unemployment figures out of China.

Outside of the stats, the markets reacted to the weekend drone strikes on Saudi oil fields and further unrest in HK.

Out of China

In August, fixed asset investment rose by 5.5% year-on-year, easing from 5.7% in July. Economists had forecast a 5.6% increase.

Year-on-year, industrial production rose by just 4.4% in August, falling well short of a forecasted 5.2% increase. In July, production had increased by 4.8%.

Retail sales also came in softer, rising by 7.5% in August, year-on-year, falling short of a forecasted 7.9% increase. Sales had risen by 7.6% in July.

The only positive was a fall in the unemployment rate from 5.3% to 5.2% in August.

The Aussie Dollar moved from $0.68763 to $0.68700 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.10% to $0.6872.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.09% to $0.6383, while the Japanese Yen was up by 0.26% to ¥107.81 against the U.S Dollar.

Demand for the Yen surged in the early part of the day as the U.S blamed Iran for the drone attacks on the Saudi oil fields. The Yen hit a morning high ¥107.46 before easing back.

In the equity markets, the Hang Seng was down by 1.09%, pressured by events in HK over the weekend. Weak economic data out of China also weighed on the HSI and on the CSI300, which was down by 0.27% at the time of writing. The ASX200 was flat after recovering from a heavy slide at the open.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Key stats are limited to finalized August inflation figures out of Italy that will have a muted impact on the EUR.

Market risk sentiment will influence through the day, with the Middle East now back in focus.

We can also expect Brexit chatter to provide direction later in the day.

At the time of writing, the EUR was flat at $1.1073.

For the Pound

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

Ahead of tomorrow’s Supreme Court ruling on the lawfulness of suspending Parliament, the British PM is due to meet Juncker and Barnier later today.

Updates from talks will have a material impact on the Pound. Hopes of a deal drove the Pound to $1.25 levels late last week, expect a reversal if there’s any negative chatter.

At the time of writing, the Pound was down by 0.20% to $1.2476.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar, with September NY Empire State Manufacturing Index figures due out.

With the stats are on the lighter side, we can expect Dollar sensitivity to the numbers. While the headline figure will be the key driver, new orders will also influence.

Outside of the numbers, any further chatter from the Oval Office or Beijing on trade will also need monitoring.

There’s also Washington’s response to the latest attack on Saudi oil fields to also consider.

The Dollar Spot Index was down by 0.12% to 98.141 at the time of writing.

For the Loonie

It’s a quiet start to the week on the economic calendar. July foreign securities purchases are due out later today.

We can expect the markets to brush aside the numbers, with the Loonie finding direction from crude oil prices.

At the time of writing, Brent was up 9.96% to $66.22 in response to the attacks on Saudi oil fields, driving the Loonie back towards $1.31 levels against the Greenback. Brent had hit a morning high $66 before easing back.

The Loonie was up by 0.42% at C$1.3232, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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