Canada Markets closed

Nonfarm Payrolls and Wage Data Bring the Dollar into Focus

Bob Mason
Retail sales figures weigh on the Aussie Dollar early, with Brexit, Italy and Germany all in focus alongside trade talks between Trump and Xi.

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side, limited to 3rd quarter wholesale inflation and September retail sales figures out of Australia.

For the Aussie Dollar,

  • In the 3rd quarter, final demand prices rose by 0.8%, quarter-on-quarter, coming in well ahead of a forecasted 0.2% rise, with the wholesale price inflation accelerating from a 2nd quarter 0.3%, according to figures released by the ABS.
  • Year-on-year, final demand prices rose by 2.1%, reflecting a marked increase from the 2nd quarter’s 1.5%.

The pickup was attributed to a marked increase in final demand prices on imports, which rose by 1.6% quarter-on-quarter and by 4.3% year-on-year.

Retail sales offset the positive inflation figures, with retail sales rising by just 0.2% in September, falling short of a forecasted and August 0.3% rise, according to figures released by the ABS.

  • Food retailing led the way in September, rising by 0.4%, with sales in cafés, restaurants and takeaways also rising, up 0.5%.
  • Weighing on retail sales were falling sales in clothing, footwear and personal accessories (-1.2%), while other retailing, household goods and department store sales were flat for the month.
  • Quarter-on-quarter, sales also rose by just 0.2% in the 3rd quarter, slowing from a 2nd quarter 1% increase, with clothing, footwear and personal accessories (-0.6%), department store sales (-0.8%) and household goods retailing (-0.7%) weighing.
  • Contributing to the quarterly increase in retail sales were a 1.2% rise in cafes restaurants and takeaway food services and a 2.2% rise in other retailing.

The Aussie Dollar moved from $0.72094 to $0.72078 upon release of the figures, before easing to $0.7199 at the time of writing, down 0.10% for the session.

Elsewhere, the Japanese Yen was down 0.01% to ¥112.73 against the U.S Dollar, with the Kiwi Dollar up just 0.02% to $0.6656, the relatively flat start to the day coming off the back of a U.S Dollar reversal on Thursday that saw the Kiwi Dollar rally 2.12% on the day.

The Day Ahead:

For the EUR, economic data scheduled for release includes finalised October manufacturing PMI numbers out or France, Germany and the Eurozone, with Italy and Spain’s manufacturing PMI numbers likely to be of greater influence barring a material deviation in Germany’s finalized number.

Outside of the numbers, geo-political risk continues to be an influence, with the Italian coalition government and the budget and the race to replace Chancellor Merkel as the leader of the CDU Party also of interest.

At the time of writing, the EUR was down 0.11% to $1.1396, with this morning’s stats and geo-political risk the key driver through the day.

For the Pound, economic data is limited to October’s construction PMI number, which is forecasted to be Sterling negative, but would need to be quite dire to knock the Pound off its current path, with Brexit chatter remaining the key driver.

Rising hopes of a deal will see the Pound rise alongside, with a bounce back to $1.30 levels on Thursday just a taste of where the Pound can go on an actual deal, a deal also supporting a more hawkish BoE.

At the time of writing, the Pound was down 0.18% to $1.2989, with Brexit chatter the key driver through the day.

Across the Pond, it’s a busy day ahead, with key stats scheduled for release out of the U.S including October nonfarm payroll, wage growth figures and the unemployment rate along with September’s trade data.

Wage growth and the NFP numbers will remain the key driver on the data front, while there will be a look through the trade figures to get a sense of whether the ongoing trade war with China has had any effect on the trade imbalance.

Outside of the stats, expect some Oval Office chatter, some positive updates on talks between Trump and China’s Premier Xi easing back demand for the Greenback.

At the time of writing, the Dollar Spot Index was up 0.10% to 96.376, with today’s stats and the Oval Office the key drivers through the day.

For the Loonie, October’s employment figures and September’s trade data are scheduled for release. Data in line with or worse than forecast would be a negative for the Loonie, with forecasts pointing to a narrowing in the trade surplus and an unchanged unemployment rate.

The Loonie was down 0.08% to C$1.3096 against the U.S Dollar at the time of writing.

This article was originally posted on FX Empire

More From FXEMPIRE: