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It’s Geopolitics in the Day Ahead, with Trade and the UK Elections in Focus

Bob Mason

Earlier in the Day:

It was a relatively busy start to the week on the Asian economic calendar.

The Japanese Yen was in action, with finalized 3rd quarter GDP in focus early in the day.

Following impressive labor market numbers from the U.S, it was a bullish start to the week for the Asian equity markets. With the FED in action mid-week, the latest figures will ease any immediate pressure on the FED, in spite of the disappointing PMI numbers for November.

On the geopolitical front, however, hopes of the U.S and China reaching an agreement may have eased through the weekend. At the end of last week, the U.S administration stated that fresh tariffs will be rolled out on 15th December as planned…

From the weekend, trade data from China was also on the bearish side.

China’s U.S Dollar trade surplus narrowed from $43.02bn to $38.73bn in November. While imports rose by 0.3%, year-on-year, exports fell by 1.1%.

Economists had forecast a 1% rise in exports and a 1.8% fall in imports…

From the numbers, there was further evidence of the impact of the ongoing U.S – China trade war, with exports to the U.S sliding once more.

With China demanding a rollback in tariffs and the U.S administration planning to introduce more on Sunday, it could be a telling week…

For the Japanese Yen

The economy grew by 0.4% in the 3rd quarter, quarter-on-quarter, coming in ahead of a prelim 0.1%. In the 2nd quarter, the economy had also grown by 0.4%.

Year-on-year, the economy grew by 1.8%, coming in ahead of a forecast of 0.7% and prelim 0.2%. In the 2nd quarter, the economy had also grown by 1.8%.

According to the cabinet office,

  • Quarter-on-quarter, capital expenditure was revised upwards from a 0.9% increase to a 1.8% rise, with household consumption revised up from 0.3% to 0.5%.
  • With minor revisions elsewhere, private demand was revised up from a 0.1% rise to a 0.6% increase in the quarter.
  • Domestic demand also saw an upward revision, from 0.2% to 0.6%.

The latest figures come off the back of the IMF’s cut to growth forecasts back in November, from 0.9% to 0.8% for 2019.

The Japanese Yen moved from ¥108.639 to ¥108.576 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.01% to ¥108.57 against the U.S Dollar

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.15% to $0.6831, with the Kiwi Dollar down 0.21% to $0.6552.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats are limited to Germany’s trade figures for October. While there’s little optimism across the manufacturing sector, we can expect the EUR to react to the numbers.

On the geopolitical risk front, chatter on trade and opinion polls from the UK will also be in focus.

At the time of writing, the EUR was down by 0.03% to $1.1057.

For the Pound

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

A lack of stats leaves the Pound in the grasp of British politics. Opinion polls and predictions saw a rise in Tory party support at the weekend, which is Pound positive.

While the polls and predictions are Sterling positive, expect fresh polls to have a greater impact later in the day.

At the time of writing, the Pound was up by 0.05% to $1.3146.

Across the Pond

It’s a particularly quiet day on the economic calendar. There are no material stats due out of the U.S to provide the Greenback with direction.

A lack of stats should be Dollar positive at the start of the week. Later in the session, the focus will be on trade, however. Any updates from the U.S administration will influence.

At the time of writing, the Dollar Spot Index was flat at 97.704.

For the Loonie

It’s a relatively busy day on the economic calendar. October building permit and November housing start figures will be in focus.

Barring particularly dire numbers, however, we would expect the stats to have a relatively muted impact on the Loonie.

Following particularly disappointing employment figures from last week and weaker GDP numbers from the week before, expect the Loonie to be under pressure at the start of the week.

The Loonie was down by 0.04% to C$1.3260, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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