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NFP and Wage Growth Figures to Put the USD in the Spotlight

Bob Mason
Retail sales figures weigh on the Aussie Dollar early, with Brexit, Italy and Germany all in focus alongside trade talks between Trump and Xi.

Earlier in the Day:

Economic data released through the Asian session this morning included August household spending figures out of Japan and August retail sales figures out of Australia.

For the Japanese Yen, August household spending impressed, with spending surging by 3.5%, month-on-month, coming in ahead of a forecasted 0.4% rise, whilst more than reversing July’s 1.1% slide. Year-on-year, spending jumped by 2.8%, which was better than a forecasted stall, following a 0.1% rise in July.

The year-on-year increase in spending was attributed to a rise in spending on:

  • Education (+25%); transportation & communication (+15.1%); medical care (+7.1%) and housing (+6.4%), with increased spending also seen on clothing & footwear and furniture & household utensils.

Dragging on spending, year-on-year, included a fall in spending on:

  • Culture & recreation (-4.1%); fuel, light & water charges (-1.8%) and food (-1.5%).

The Japanese Yen moved from ¥113.866 to ¥113.884 against the Dollar upon release of the figures, before easing to ¥114.01 at the time of writing, down 0.08% for the session.

For the Aussie Dollar, retail sales rose by 0.3% in August, which was in line with forecasts, whilst improving on July’s stall, according to figures released by the ABS.

  • 5 of the 6 retail industries recorded a rise in sales, with cafes, restaurants and takeaway food services (0.7%) leading the way.
  • A rise in sales was also reported for clothing, footwear & personal retailing (0.8%); other retailing (0.4%), department stores (0.9%) and household goods retailing (0.2%).
  • Food retailing was reported to be relatively unchanged.

The Aussie Dollar moved from $0.70680 to $0.70754 upon release of the figures, before rising to $0.7076 at the time of writing, flat for the session.

Elsewhere, the Kiwi Dollar continued to struggle, down 0.05% at $0.6476

In the equity markets, it was a mixed start to the day, the Nikkei and Hang Seng down 0.53% and by 0.1% respectively, weighed by the overnight losses in the U.S, while the ASX200 was up 0.3% to buck the trend early on, the big-4 banks finding support following the recent sell-off, .

The Day Ahead:

For the EUR, economic data scheduled for release through the morning includes August factory order and wholesale inflation figures out of Germany, with a forecasted rise in factory orders likely to provide some support for the EUR that’s been in recovery mode as government bond yield differentials narrowed on Thursday.

Geo-political risk effects may ultimately overshadow the stats ahead of labour market numbers out of the U.S this afternoon.

At the time of writing, the EUR was up 0.02% to $1.1516, geo-political risk and today’s German factory orders continuing to be the key risks for the EUR.

For the Pound, it’s a relatively quiet day on the data front, with stats limited to September house price figures that are unlikely to have an impact on the Pound.

Focus remains on Brexit chatter and whether there can be any progress on the Irish border issue and ultimately trade terms.

At the time of writing, the Pound was up 0.04% to $1.3025, a recovery back through to $1.30 levels likely to be short lived should Theresa May Brexit talks lack progress.

Across the Pond, economic data is on the heavier side, with key stats through the day including September’s wage growth, nonfarm payroll figures along with the U.S unemployment rate and August trade data.

While there will be some focus on the trade data, as Trump continues to attempt to rebalance the books, wage growth will likely be the key driver through the day, though nonfarm payrolls will need to show 200k plus jobs added in September to appease the markets.

Outside of the stats, geo-political risk continues to be a factor, with any jump in trade tensions likely to see a pullback in U.S Treasury yields, China now considered a greater threat to the U.S than Russia.

At the time of writing, the Dollar Spot Index was flat at 95.755, with today’s stats and Oval Office chatter the key drivers through the day.

For the Loonie, key stats through the week include September employment numbers and August trade data. We can expect the Loonie to be particularly sensitive to the stats, with the USMCA placing the direction for the Loonie back in the hands of the stats and market sentiment towards BoC monetary policy, Thursday’s disappointing Ivey PMI number having weighed heavily           .

At the time of writing, the Loonie was up 0.04% to C$1.2919 against the U.S Dollar.

This article was originally posted on FX Empire