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The Aussie Gets a Boost Early as Focus Shifts to the EUR and the ECB

Bob Mason
Employment numbers give the Aussie Dollar an early jump on the majors, with economic data and the ECB bringing the EUR into focus.

Earlier in the Day:

Economic data released through the Asian session this morning included December employment figures out of Australia and prelim manufacturing PMI numbers out of Japan.

For the Aussie Dollar, according to figures released by the ABS,

  • The number of employed rose by 21.6k in December, coming in ahead of a forecasted 16.5k increase, following November’s 37.0k rise.
  • Full employment fell by 3.0k in the month, following a 6.4k decrease in November.
  • The unemployment rate eased back from a November and forecasted 5.1% to 5.0% in December, with the participation rate falling from 65.7% to 65.6%, contributing to the fall in the unemployment rate.
  • Part-time employment increased by 24.6k, following on from a 43.4k increase in November.
  • Year-on-year, full-time employment has increased by 162k, while part-time employment has risen by just 106.6k.

The Aussie Dollar moved from $0.71431 to $0.71584 upon release of the figures, before rising to $0.7163 at the time of writing, a gain of 0.29% for the session.

For the Japanese Yen, the prelim manufacturing PMI fell from 52.6 to 50.0 in January.

  • The stagnation in January ended the longest expansionary run in over a decade.
  • Exports fell at the strongest pace in two-and-a-half years.
  • Production scaled back for the first time since July 2016.
  • Confidence hit the lowest level in over 6-years.

The Japanese Yen moved from ¥109.575 to ¥109.630 against the U.S Dollar, upon the release of the numbers, before recovering to ¥109.54 at the time of writing, a gain of 0.05% for the session.

Elsewhere, the Kiwi Dollar was up 0.16% to $0.6799, with risk sentiment providing support through the early part of the day, the markets brushing aside yet another set of weak economic stats out of Asia.

The Day Ahead:

For the EUR, it’s a busy day ahead, with key stats scheduled for release including prelim January private sector PMI numbers, which are scheduled for release ahead of the ECB’s first monetary policy decision of the year.

Following dovish commentary from ECB President Draghi in recent weeks and a downgrade to growth by the IMF for the region, the EUR will likely be particularly sensitive to today’s figures.

Outside of the numbers, the ECB’s first monetary policy decision of the year is due. Focus will be on the press conference, where the markets will be looking for any guidance on interest and deposit rates. The PMI numbers that precede the policy decision could provide some optimism, though the figures will need to be better than forecasted.

Following a string of weak numbers out of China and the region, whether the Eurozone can bounce back from a weaker end to 2018 remains to be seen.

At the time of writing, the EUR was up 0.07% to $1.1389, with today’s stats and the ECB the key drivers in through the day.

For the Pound, there are no material stats scheduled for release through the day, leaving the Pound in the hands of Brexit chatter.

The general consensus is that Britain’s departure from the EU will be delayed and that the chances of a no deal departure are on the decline. With the Pound having rallied through to $1.30 levels through Wednesday, the next target will be $1.32 for the bulls, though much will depend on chatter from both parliament and the EU.

Any hints of an unwillingness to agree to an extension and the Pound could face selling pressure later in the day.

At the time of writing, the Pound was up 0.02% to $1.3088, with updates on Brexit the key driver through the day.

Across the Pond, economic data scheduled for release includes prelim private sector PMI numbers for January, along with the weekly initial jobless claims numbers.

A failure to iron out differences with China on trade will leave the Dollar relatively sensitive to the manufacturing PMI, while it will ultimately boil down to service sector numbers on the day. We can expect the initial jobless claims figures to be largely brushed aside barring a material jump from the previous week.

Outside of the numbers, chatter from the Oval Office and Capitol Hill will also influence, the government shutdown and any further clarifications on contradictory statements on trade talks with China there to consider through the day.

At the time of writing, the Dollar Spot Index was down 0.06% to 96.063.

For the Loonie, it’s a quiet day on the economic data front, leaving the Loonie back in the hands of market risk appetite and the direction of crude oil prices through the day.

Economic data out of Canada this week has failed to impress, which should keep the Loonie on the back foot barring a jump in crude oil prices that could come from, either talk further production cuts or a resolution to trade talks between the U.S and China. A threat of sanctions on Venezuela eased some of the pain for crude oil overnight.

Today’s weekly EIA numbers out of the U.S will be in focus, as will updates from the U.S administration on trade and the government shutdown.

The Loonie was up 0.10% to C$1.3330 against the U.S Dollar at the time of writing.

This article was originally posted on FX Empire