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UK Retail Sales, Carney and ECB Minutes Put the GBP and EUR in Focus

The FOMC minutes may have eased demand for the Dollar, but with UK retail sales figures, Carney and the ECB’s monetary policy minutes in focus today, it could all swing back in the Dollar’s favor.

Earlier in the Day:

Economic data released through the Asian session this morning was limited to April trade data out of New Zealand.

For the Kiwi Dollar, April’s monthly trade balance was a surplus of NZ$263m, which was lower than the average monthly surplus in the last five April months (NZ$344), with March’s deficit revised from NZ$86m to NZ$156m, according to figures released by NZStats.

  • Goods exports rose NZ$345m (7.3%) to NZ$5.05bn, a new high for total exports in an April month and the second highest on record.

  • The jump in exports was attributed to rising fruit exports, which surged by 51% to NZ615m, meat and edible offal (+15%) and milk powder, butter and cheese (+6.2%).

  • Exports to China jumped by 21% to NZ$1.2bn, while exports to the EU rose by 25% to NZ$625m and by NZ$32m to NZ$340m (+10%) to Japan.

  • Goods imports rose by NZ$629m (15%) to NZ$4.8bn, also a new high for total imports in an April month.

  • The rise in imports was attributed to a 56% jump in petroleum and products imports in April, with imports of vehicles, parts and accessories up 24% to NZ$911m and the import of mechanical machinery and equipment up 19% to NZ$684m.

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The Kiwi Dollar moved from $0.69278 to $0.69272 upon release of the figures, the latest numbers positive though revisions to the March figures weighed. At the time of writing, the Kiwi Dollar was up 0.16% to $0.6928.

Elsewhere, the Japanese Yen found more support, rising by 0.41% to ¥109.63 against the Dollar, as appetite for the havens continued to rise and demand for the Dollar eased in the wake of the Wednesday FOMC meeting minutes that reduced the odds of 3 more rate hikes through the remainder of the year. The Aussie Dollar was also up through the session, rising by 0.12% to $0.7569.

In the equity markets it was a mixed bag, with the jump in the Yen and Trump’s latest thought of introducing tariffs on car imports weighing on the Nikkei, which was down 1.13% at the time of writing. While the FOMC minutes and some retweeting over progress on China trade talks provided some support, concerns over North Korea lingered following the latest threats from the North Korean leader, pinning back risk appetite early on, leaving the Hang Seng and CSI300 relatively flat at the time of writing. The ASX200 was heading for its 6th consecutive day in the red, with the Big-4 banks on the slide alongside mining stocks.

The Day Ahead:

For the EUR, after a dire day on the data front on Wednesday that saw private sector growth slow to 18-month lows, focus shifts to 2nd estimate GDP and consumer sentiment numbers out of Germany this morning and, more importantly, the ECB policy meeting minutes this afternoon.

Barring a move from prelim 1st quarter GDP numbers, the minutes will be the key driver today, though any hawkish comments in the minuets will likely be discounted following the disappointing prelim May PMI numbers released on Wednesday.

At the time of writing, the EUR was up 0.12% to $1.1711, with today’s stats, ECB minutes and risk appetite to provide direction through the day.

For the Pound, it’s another big day, with April’s retail figures scheduled for release this morning. April inflation figures took some pressure of the BoE to make a move in the near-term, though the markets may rethink outlook towards policy should retail sales impress, anything in line with or better than forecast a positive for the Pound.

Outside of the data, BoE Governor Carney is also scheduled to speak today, with any dovish commentary likely to put pressure on the Pound ahead of the retail sales figures, Carney also scheduled to also speak overnight.

The Pound was up 0.19% to $1.3372 at the time of writing, with Carney and retail sales the key drivers through the day.

Across the Pond, its quieter day on the data front, with key stats limited to the weekly jobless claims figures and April existing home sales.

While the stats will provide direction through the day, FOMC member commentary and the Oval Office will likely remain the area of focus, FOMC members Dudley, Bostic and Harker scheduled to speak through the day, with Trump’s trade talk also influencing the markets.

At the time of writing, the Dollar Spot Index was down 0.19% to 93.829, the markets responding to the FOMC meeting minutes and the rise in geo-political risk in the wake of recent Trump tweets and threats from North Korea.

This article was originally posted on FX Empire

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