Yahoo Finance The EUR and the Pound in Focus as the U.S takes a Break
Earlier in the Day:
Another quiet day on the stats through the Asian session this morning, with key data limited to New Zealand’s 3rd quarter retail sales figures and they weren’t great.
Retail sales increased by just 0.2% in the quarter, falling short of a forecasted 0.4% increase, following the 2nd quarter’s 2% rise. Despite the soft numbers, the Kiwi Dollar moved from $0.68794 to $0.68829 upon release of the data, with the demise of the U.S Dollar offsetting any negative sentiment towards the New Zealand economy.
The latest numbers provides further justification for the RBNZ to hold through next year, the New Zealand economy appearing to have faltered of late.
Elsewhere, the Aussie Dollar was up just 0.07% at $0.7622, supported by an overnight rally in commodity prices, with the Yen sitting at ¥111.28, down 0.05% but still very much up against the Dollar through the week, following the Dollar slump on Wednesday.
In the equity markets, it was a mixed bag at the time of writing. The Hang Seng was holding on to the solid gains through the current week, while the CSI300 coughed up 1.5%, with the ASX200 flat. With Japan and the U.S now on holiday, trading volumes are on the lighter side, with the markets only having the FOMC meeting minutes to consider through the day.
The Day Ahead:
Finally some macroeconomic data out of the Eurozone today, with Germany’s 2nd estimate GDP numbers for the 3rd quarter scheduled for release together with November’s prelim private sector PMI numbers.
Following the EUR’s gains on Wednesday, there could be more through this morning, with Germany’s GDP figure forecasted to be EUR positive, while service and manufacturing PMIs are expected to show continued momentum in the Eurozone’s private sector through the final quarter of the year.
For the EUR, it’s not just the data however, with Merkel’s fight for survival also a factor. News hit the wires through Wednesday of the SPDs reconsidering its position on a continuation of the ‘grand coalition.’ Germany’s president and SDP member Steinmeier will be looking to force Martin Schulz’s hand, who could be under pressure to resign if he doesn’t concede to rising pressure to join with Merkel.
That’s good news for Merkel, the EUR and the EU for that matter and with it comes news of the FDPs being willing to resume talks on forming a coalition with the Greens and Merkel’s conservatives.
At the time of writing, the EUR was up 0.05% at $1.1828 and with the U.S on holiday, positive numbers could see the EUR make a run at $1.19, particularly if the ECB monetary policy meeting minutes due out this afternoon are more hawkish than the market anticipates.
For the Pound, stats include 2nd estimate GDP numbers for the 3rd quarter, together with 3rd quarter business investment figures that will provide some support for the Pound through the day.
It’s been an eventful week for the Pound, with the inflation report hearings and the autumn budget, but ultimately it’s been the Dollar that has led the Pound back to $1.33 levels this week.
Brexit and the challenges ahead for the British Prime Minister remain key issues for the UK and the Pound, with the Chancellor of the Exchequer having passed the test in yesterday’s budget.
At the time of writing, the Pound was down 0.03% to $1.3321, with the Pound unlikely to see a material upside through the day, barring an upward revision to GDP numbers.
Across the Pond, the markets are closed for Thanksgiving, with the Dollar on the back foot following a dovish tone within Wednesday’s FOMC meeting minutes. Since FOMC member Harker’s hawkish outlook on rates for next year, there had been a shift in sentiment towards FOMC monetary policy, but with inflation failing to make a move towards the FED’s 2% objective, the doves will more than likely continue to rule the roost. The one caveat is that there will be some desire to provide the FED with a buffer ahead of any economic slowdown, though there will be some caution here.
At the time of writing, the Dollar Spot Index was flat at 93.207, the Dollar relatively range bound following Wednesday’s slump. Direction through the day will likely to be hinged on data out of the Eurozone and Merkel’s progress in Germany.
This article was originally posted on FX Empire
