Yahoo Finance Dollar Takes an Early Hit as Focus Remains on Turkey and Trade
Earlier in the Day:
Economic data released through the Asian session this morning included July trade data out of Japan and July employment numbers out of Australia.
For the Japanese Yen, the trade balance contracted from a surplus ¥721bn to a ¥231bn deficit, with the deficit coming in larger than a forecasted ¥0.5bn.
Exports rose by just 3.9%, falling well short of a forecasted 6.3% rise, following June’s 6.7% rise in exports.
Imports surged by 14.6%, coming in ahead of a forecasted 14.4% rise, following June’s 2.6% increase.
The weaker than expected export figures come at a time when the markets are already jittery over the possible effects of the U.S – China trade war, which has been ever expanding to include other economies, the Japanese government due to next meet with the U.S administration next month to resume trade talks, following last week’s meetings.
On the export side, a slide in auto exports to the U.S contributed to the contraction, car exports to the U.S falling by more than 12% in July.
The Japanese Yen moved from ¥110.561 to ¥110.521 against the Dollar upon release of the figures, before falling to ¥110.81 at the time of writing, down 0.06% for the session.
For the Aussie Dollar,
The unemployment rate fell from 5.4% to 5.3% in July, which was better than forecasted, though a fall in the participation rate would have contributed to the decline.
Full-time employment rose by 19.3k, while part-time employment fell by 23.2k, leading to a net fall of 3.9k in total employment.
On wages, the ABS reported that wages increased by 1% over the 1st 6-months of the year and by 2.7% year-on-year (average weekly ordinary time earnings for full-time adults). While considered low, the 6-month figure was an improvement to the 0.6% rise over the first 6-months in 2017.
The Aussie Dollar moved from $0.72373 to $0.726 upon release of the figures before rising to $0.7265 at the time of writing, up 0.36% for the session.
Elsewhere, the Kiwi Dollar was up 0.16% to $0.6581, a softer U.S Dollar providing much needed support in the early part of the day.
In the equity markets, it was a bad start to the day with the majors tumbling at the open before the Nikkei, CSI300 and Hang Seng recovered to positive territory, the CSI300 leading the way, up 0.62% at the time of writing, while the ASX200 bucked the trend, down 0.14%.
A slide in the U.S Dollar and a rebound in the majors through the early hours came off the back of news that the U.S and China will return to the trade negotiating table later this month, easing concerns over more tariffs ahead of talks.
The Day Ahead:
For the EUR, it’s a relatively quiet day on the data front, with key stats limited to June trade figures that are forecasted to be EUR positive, though with concerns over global demand beginning to surface, as the U.S and China continue to lock horns, the EUR may not be as responsive to any numbers in line with or better than forecasted.
At the time of writing, the EUR was up 0.26% to $1.1374, with regulatory action in response to the Turkish crisis continuing to be a key consideration, as the markets assess whether a possible Turkish financial crisis can spill over to the Eurozone. Sentiment towards trade will be the other factor to consider.
For the Pound, July retail sales figures are scheduled for release later this morning and for any shift in sentiment towards the timing of the next BoE rate hike, which is currently deep into next year, the numbers are going to have to be particularly impressive following the disappointing wage growth figures released on Tuesday.
According to figures released on Wednesday, the annual rate of inflation picked up to 2.5% in July, though with core inflation sitting at 2.3%, the numbers are unlikely to raise the alarm bells for the BoE, which has pinned back inflation from this year’s 3% high.
At the time of writing, the Pound was up 0.14% to $1.2715, with today’s stats and Brexit chatter the key drivers through the day.
Across the Pond, economic data scheduled for release out of the U.S include the all-important Philly FED Manufacturing Index figures for August, the weekly jobless claims numbers and July housing sector data, which include housing starts and building permits.
On the data front, while the Philly FED manufacturing sector numbers will likely have the greatest influence, housing sector numbers will need to impress following some recently weak housing numbers to ease concerns over a slowdown in the sector.
Outside the data, the Oval Office remains an ever present risk to the markets.
At the time of writing, the Dollar Spot Index was down 0.14% to 96.565, with today’s stats expected to provide some direction, though the markets will need to keep an eye on the Oval Office, economic data having had a relatively muted impact through the week as the markets focus on geo-political events around the globe.
For the Loonie, stats are limited to June manufacturing sales figures that are unlikely to have a material impact on the Loonie, trade taking centre stage, with news hitting the wires of a possible Mexico – U.S deal on NAFTA this month suggesting that a final agreement could be in place by next month, Trump likely to be eager to finalize terms ahead of the mid-term elections.
At the time of writing, the Loonie down up 0.09% to C$1.3129.
This article was originally posted on FX Empire
