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Economic Data Gets Brushed aside as the Dollar Reminds Trump Who’s Boss

Bob Mason

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar, Japanese Yen, and Aussie Dollar were in action through the early part of the day, with economic data in focus.

While economic data got a glance, it was the market reaction to the moves in Europe and the U.S that provided direction early on.

The ECB delivered PEPP to attempt to support the markets, while the U.S government continued to hold back from shutting its borders…

For the Kiwi Dollar

Economic data was limited to 4th GDP numbers that had a relatively muted impact on the Kiwi.

The New Zealand economy grew by 0.5%, quarter-on-quarter, slowing from a revised 0.8% growth in the 3rd quarter. This was in line with forecasts.

According to NZ Stats,

  • Growth in services (+0.6%) delivered in the 4th quarter, while primary industries grew 0.5%.
  • At the industry level, growth was mixed, with 11 of the 16 industries recording increased.
  • Annual GDP growth for the year ended December 2019 was 2.3%, compared with 3.2% growth in the year ended December 2018.

The Kiwi Dollar moved from $0.57324 to $0.57367 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 3.28% to $0.5552. For the Kiwi, softer growth in the 4th quarter was the last thing needed when considering what lies ahead.

For the Japanese Yen

February inflation figures were in focus ahead of the Bank of Japan’s monetary policy decision later this morning.

The annual rate of core inflation softened from 0.8% to 0.6% in February, according to figures released by the Ministry of Internal Affairs and Communication. Economists had forecast an annual rate of core inflation of 0.5%.

Month-on-month, consumer prices fell by 0.1% after having stalled in January.

The Japanese Yen moved from ¥108.177 to ¥108.288 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.83% to ¥108.98 against the U.S Dollar.

For the Aussie Dollar

Employment rose by 26.7k in February, following a 13.5K rise in January. Economists had forecast a 10k rise.

According to the ABS,

  • The total number of people in full-time employment increased by 6,700, while people in part-time employment increased by 20,000.
  • Since February 2019, full-time employment increased by 144,300 people, while part-time employment increased by 111,900 people.
  • The employment to population ratio held steady at 62.6% in February 2020 and was up by 0.3 pts since February 2019.
  • The unemployment rate decreased from 5.3% to 5.1%, however, as the participation rate slipped by 1 point to 66.0%.

The Aussie Dollar moved from $0.57736 to $0.57633 upon release of the figures. At the time of writing, the Aussie Dollar was down by 3.27% to $0.5584.

The Day Ahead:

For the EUR

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

The lack of stats leaves the markets to respond further to the ECB’s latest move to restore calm.

With the EU in shut down mode, however, the economic doom and gloom ahead doesn’t bode well. For the markets, the bigger question is how much firepower the ECB has left to react to any marked deterioration in economic conditions.

According to the latest coronavirus numbers from the EU, Italy continues to see the death toll rise, with the shutdown coming too late for many.

At the time of writing, the EUR was down by 0.04% at $1.0911.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out of the UK to provide the Pound with direction.

We’ve seen the Pound take a beating as the markets respond to the government’s unwillingness to shut down. Baby steps are not deemed good enough and the markets are expecting Armageddon as British PM Johnson talks of a severe recession coming.

While Johnson talked of the need for a wartime government on Wednesday, the real issue is likely to be the government’s handling of the virus.

The decision to only isolate the more vulnerable to allow the virus to pass through the main population was not well-received…

On the policy front, the government’s budget and the BoE’s monetary policy response have also been modest relative to elsewhere…

At the time of writing, the Pound was down by 1.00% to $1.1492. While support would tend to kick in after the latest sell-off, the markets have formed their view on what lies ahead for the UK economy.

Across the Pond

It’s a relatively busy day ahead on the U.S economic calendar. On the economic data front, key stats include March Philly FED Manufacturing numbers and the weekly jobless claims figures.

Expect plenty of sensitivity to the numbers, with the weekly jobless claims figures likely to garner plenty of interest.

The markets will be looking for any shift in labor market conditions. Any move in initial jobless claims towards 300k levels and expect risk aversion to hit the majors once more.

As for the Dollar, the Dollar Spot Index hits 100 levels and sees further upside as the Greenback reclaims its safe haven crown.

The Dollar Spot Index was up by 0.04% to 101.196 at the time of writing.

For the Loonie

It’s a relatively quiet day ahead on the economic calendar, with February new house price figures due out later today.

We don’t expect the numbers to have any influence on the Loonie later today. The markets are looking for further action by the Bank of Canada in response to Wednesday’s 20% slide in crude oil prices.

With sentiment towards the economic outlook deteriorating by the day and the Saudis cranking up production, it doesn’t look good.

The Loonie was down by 0.86% at C$1.4629 against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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