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Retail Sales and Powell Put the Loonie and the Greenback in Focus

Bob Mason

Earlier in the Day:

The economic calendar was on the busier side once more through the Asian session this morning. 2nd quarter retail sales figures out of New Zealand and July inflation figures out of Japan provided direction.

Outside of the numbers, the market focus will shift to the Jackson Hole Symposium and FED Chair Powell’s scheduled speech. The markets continue to price in further rate cuts despite the latest FOMC meeting minutes.

Any talk of standing pat near-term could well rile the markets later today. The hope of Powell wanting to avoid rattling the markets could be of support.

For the Kiwi Dollar

Retail sales rose by just 0.2% in the 2nd quarter, quarter-on-quarter, easing back from a 0.7% increase in the 1st quarter. Economists had forecast a 0.1% rise.

According to NZ Stats,

  • Electrical and electronic goods retailing had the largest increase, up by 5% in the quarter, following a 0.3% rise in Q1.
  • Supermarket and grocery stores recorded the largest decline in the 2nd quarter, falling by 0.9%. In the 1st quarter, sales had risen by 0.4%.
  • When including the effect of fuel price changes, total retail sales rose by 0.7% in the quarter, following a 0.1% rise in the 1st

The Kiwi Dollar moved from $0.63693 to $0.63690 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.27% to $0.6384.

For the Japanese Yen

The annual rate of inflation eased from 0.7% to 0.5% July according to figures released by the Ministry of Internal Affairs and Communication. Economist had forecast a 0.5% rate of inflation. The annual rate of core inflation held steady at 0.6% in July, which was also in line with forecast.

The Japanese Yen moved from ¥106.446 to ¥106.470 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.03% to ¥106.47 against the U.S Dollar.

Elsewhere

The Aussie Dollar was down by 0.01% to $0.6756 at the time of writing.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction.

The lack of stats will leave the market focus on the Jackson Hole Symposium and any trade war chatter from Twitter…

With the ECB looking set to deliver further easing next month, will the FED suggest further easing ahead?

At the time of writing, the EUR was up by 0.05% to $1.1085.

For the Pound

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

The lack of stats will leave the Pound in the hands of Brexit chatter and MP reaction to Boris Johnson’s brief visit to Europe.

Updates from Johnson’s meeting were positive overnight and suggests that there remains the hope of a solution to the backdrop puzzle. That was probably not the news that Corbyn was hoping for…

At the time of writing, the Pound up by 0.02% to $1.2254.

Across the Pond

It’s a relatively quiet day on the economic calendar. July new home sales figures are due out later today. We expect the stats to have a muted impact on the Dollar, however.

The key driver on the day is FED Chair Powell’s speech from Jackson Hole. Following the FOMC meeting minutes from Wednesday, some clarity is needed on what lies ahead. Any hint of the FED planning to hold rates steady over the remainder of the year and expect the Dollar to bounce and riskier assets to slide.

Powell will likely want to avoid triggering the markets into panic mode and could offer the support of a rate cut with caveats…

U.S President Trump will almost certainly be looking out for Powell’s scheduled speech… It’s Friday, so Trump’s Twitter account will likely to be more active than usual.

At the time of writing, the Dollar Spot Index was down by 0.02% to 98.19.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. June retail sales figures are due out of Canada.

We can expect the numbers to have a material impact on the Loonie later today. The next BoC monetary policy meeting is rapidly approaching. As other central banks prepare for further easing, the BoC may be looking to track the FED’s last rate cut. Inflation figures suggested otherwise midweek, so today’s figures would need to disappoint…

The Loonie was up by 0.02% at C$1.3296, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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