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Economic Data and Trade Talk Updates to Drive the Markets

Bob Mason

Earlier in the Day:

It was a busier day on the economic calendar through the Asian session this morning.

Key stats included Japan’s October inflation figures and prelim private sector PMI numbers for November.

On the geopolitical risk front, positive chatter on trade from late in the day on Thursday led to a pickup in risk appetite early on.

For the Japanese Yen

The annual rate of core inflation eased from 0.3% to 0.2% in October, according to figures released by the Ministry of Internal Affairs and Communication. Economists had forecast a core inflation rate of 0.4%.

The Japanese Yen moved from ¥108.612 to ¥108.590 upon release of the figures that preceded the prelim PMIs.

Manufacturing sector activity contracted at a slower pace in November, with the PMI rising from 48.4 to 48.6. Service sector activity returned to expansion in November, with the PMI rising from 49.7 to 50.4.

According to the November Markit Survey,

  • Output at the composite level saw a weaker rate of decline, with the manufacturing sector also seeing a weaker rate of decline. A return to growth in the services sector was not enough to offset the contraction in the manufacturing sector, however.
  • Japan’s Composite PMI came in at 49.9 in November, rising from 49.1 in October.
  • At composite level, new orders saw no change in November, following a fall in October, supported by a pickup in service-sector orders. The manufacturing sector saw new orders fall at a slower pace.
  • New export orders in the services sector saw weaker growth, however, while the manufacturing sector reported a weaker rate of decline.

The Japanese Yen moved from ¥108.598 to ¥108.633 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.04% to ¥108.67 against the U.S Dollar

Across the Majors

At the time of writing, the Aussie Dollar was up by 0.06% to $0.6791, with the Kiwi Dollar up by 0.03% to $0.6405.

The Day Ahead:

For the EUR

It’s a particularly busy day ahead on the economic calendar. Key stats include prelim November private sector PMI numbers for France, Germany and the Eurozone.

After a particularly quiet week, we can expect the numbers to have a material impact on the EUR.

Germany’s manufacturing and the Eurozone’s composite PMIs will continue to have the greatest impact.

Private sector activity in France would need to stand firm, however, for the EUR to respond to any improvement in Germany’s manufacturing sector.

Barring deviation from 1st estimates, Germany’s 2nd estimate GDP numbers should have a muted impact on the EUR.

At the time of writing, the EUR was up by 0.04% to $1.1063.

For the Pound

It’s yet another quiet day ahead on the data front. There are no material stats due out of the UK to provide direction to the Pound.

UK Politics will be the main area of focus on the day, with less than 3-weeks until the UK General Election…

It’s the 2nd leadership debate later today that will garner plenty of interest. This time around, leaders of the Liberal Democrats and the Scottish National Party will also join.

We saw the Pound fall as the markets reacted to the last debate, despite YouGov giving Boris Johnson a narrow margin of victory. With 4 party leaders in the mix this time around, it’s likely to get a little more heated…

At the time of writing, the Pound was up by 0.02% to $1.2916

Across the Pond

It’s a relatively busy day on the economic calendar. Stats due out of the U.S include prelim November private sector PMI numbers and finalized consumer expectation and sentiment numbers.

While the composite PMI will influence, continued service sector growth will be key to supporting the relatively upbeat sentiment towards the U.S economy.

Outside of the numbers, however, it’s Friday and Trump’s Twitter account could be more active than usual and may cast a shadow on the numbers.

The Dollar Spot Index was down by 0.05% to 97.947 at the time of writing.

For the Loonie

It’s a relatively quiet but important day on the economic calendar. September retail sales figures are due out later today that will provide the Loonie with direction.

As the Bank of Canada gets more cautious, weak numbers could raise the chances of a near-term rate cut that would sink the Loonie.

Updates from trade talks will also influence on the day.

The Loonie was up by 0.08% to C$1.3275, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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