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Stats Are Likely to Play 2nd Fiddle to Chatter on Iran and China

Bob Mason
Negative comments ahead of trade talks and rhetoric from Iran in response to the prospect of sanctions dampen the mood ahead of the European open.

Earlier in the Day:

Economic data was on the lighter side through the Asian session this morning.

New Zealand’s May Trade figures provided direction in the early part of the day. Later in the morning, the BoJ released its monetary policy meeting minutes from May.

Outside of the numbers, chatter from, China, the Middle East, and the U.S administration also influenced through the session.

The list of possible market shocks just keeps getting longer…

For the Kiwi Dollar

The trade surplus narrowed from a revised NZ$383m to NZ$264m in May, month-on-month. Economists had forecasted a narrowing to NZ$200m. Year-on-year, the trade deficit narrowed from a revised NZ$5,560m to NZ$5,490m. Economists had forecasted a narrowing to NZ$5,530m.

According to figures released by NZ Stats,

  • The value of total goods exports increased by NZ455m (8.5%) to NZ$5.81bn from May 2018.
    • Exports of dairy products led way, rising by NZ$171m (15%) to NZ$1.3bn.
    • Across trading partners, exports to China jumped by NZ$349m (29%) to NZ$1.5bn.
  • The value of total goods imports increased by NZ$390m (7.6%) to NZ$5.54bn.
    • The increase was attributed to an NZ$363m increase in the imports of crude oil. (In May 2018, an oil refinery shutdown meant that refined products were imported, leading to a sizeable fall in crude oil imports).

The Kiwi Dollar moved from $0.66199 to $0.66213 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.45% to $0.6649. The relatively stable trade figures offset negative comments on trade. Exports to China were certainly a factor.

For the Japanese Yen

The Bank of Japan released the monetary policy meeting minutes from the April 24th – 25th  meeting. Following last week’s monetary policy decision and monetary policy statement, the dated minutes were brushed aside.

The Japanese Yen moved from ¥107.303 to ¥107.391 upon release of the minutes. At the time of writing, the Japanese Yen was up by 0.39% to ¥106.88 against the U.S Dollar.

Elsewhere

The Aussie Dollar was down by 0.03% to $0.6961. Risk aversion pinned back the Aussie early on.

The Day Ahead:

For the EUR

There are no material stats due out of the Eurozone today.

A lack of stats leaves the markets to consider monetary policy divergence that has favored the EUR and rising geopolitical risk.

Geopolitics will remain the main area of focus ahead of consumer confidence figures due out of the U.S later in the day.

At the time of writing, the EUR was up by 0.09% to $1.1409.

For the Pound

It’s another quiet day for the Pound.

While the Pound has found support of late, recent economic data suggests that the BoE is biding its time before shifting to a more dovish stance.

The rising prospects of a no-deal Brexit, the extended trade war between the U.S and China and shift in BoE sentiment towards inflation suggests some downside.

Support could come from any positive updates from the G20 Summit later in the week. One reality is, however, that the trade war is unlikely to end any time soon, handshakes or not…

At the time of writing, the Pound was up by 0.02% to $1.2746.

Across the Pond

It’s a busier day ahead on the economic calendar.

May new home sales, April house price figures, and June consumer confidence figures are due out this afternoon.

The key driver will be consumer confidence numbers, which will need to hold onto 130 levels to support the Greenback.

Outside of the stats, the Oval Office will also be in focus. Will there be any further chatter from the Oval Office on trade or Iran?

While we can expect the Oval Office to be of influence, FED Chair Powell and FOMC members Williams, Bostic, and Bullard are also scheduled to speak.

Will there be a swing in favor of a rate cut in September or even sooner?

At the time of writing, the Dollar Spot Index was down by 0.11% to 95.876.

For the Loonie

It’s another quiet day on the economic calendar. April wholesale sales figures are due out, which will provide direction.

Sentiment towards the Iran and U.S chatter on trade will also get the markets to begin to focus on the G20, which is just days away.

The Loonie was down by 0.20% to C$1.3185, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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