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Economic Data and Brexit Put the Pound in the Spotlight

Earlier in the Day:

It’s was a busier start to the day on the economic calendar this morning. The Kiwi Dollar was in action, with economic data out of China also in focus this morning.

While economic data was of influence, news of Johnson & Johnson hitting pause on its vaccine trials weighed on riskier assets. A reported pause in the J&J trial due to a patient becoming ill weighed on risk appetite as new COVID-19 cases continue to rise. Adding to the negativity was news from China of its 1st COVID-19 case since August.


For the Kiwi Dollar

Electronic card retail sales rose by 5.4% in September, reversing most of a 7.9% slide from August. Compared with September 2019, spending was up by 7.3%. In August, spending had been down by 0.8%, year-on-year.

According to NZ Stats,

  • Spending on durables rose by 19%, with spending on motor vehicles (excl. fuel) up by 15%, year-on-year.
  • There were also marked increases in spending on consumables (10%) and apparel (6.6%).
  • Compared with September 2019, spending on hospitality (-4.9%) and fuel (-11%) declined, however.
  • The rise in spending in September 2020 was attributed to fewer COVID-19 restrictions when compared with August 2020. The COVID-19 alert level for Auckland was lowered from level 3 to level 2.
  • Spending on hospitality and fuel rose by 13% and by 11% respectively in the month.

The Kiwi Dollar moved from $0.66451 to $0.66475 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.08% to $0.6642.

Out of China

China’s US Dollar trade surplus narrowed from $58.93bn to $37bn in September. Economists had forecasted a narrowing to $58.0bn.

Exports rose by 9.9%, compared with September 2019, following a 9.5% jump in August. Economists had forecasted a 10.0% increase.
Imports increased by 13.2%, following a 2.1% slide in August. Economists had forecast a 0.3% rise.
At the time of writing, the Aussie Dollar was down by 0.51% to $0.7172. The Aussie Dollar showed little response to the numbers, the early slide coming from risk-off sentiment early on.


Elsewhere

At the time of writing, the Japanese Yen was down by 0.05% ¥105.38 against the U.S Dollar.

The Day Ahead:

For the EUR
It’s a relatively busy day ahead on the economic calendar. Key stats include ZEW Economic Sentiment figures for Germany and the Eurozone. Finalized September inflation figures for Germany are also due out but should have a muted impact on the EUR.

Away from the economic calendar, any further talk of a reintroduction of lockdown measures, Brexit, and U.S politics will also influence.

At the time of writing, the EUR was down by 0.15% to $1.1795.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include September’s claimant counts and August’s unemployment rate and employment change figures.

With the UK seeing a marked increase in new COVID-19 cases in September, any jump in claimant counts will weigh.

Earlier in the day, the BRC Retail Sales Monitor rose by 6.1% in September, year-on-year. In August, the Monitor had risen by 4.7%. The upbeat data failed to provide early support for the Pound, however.

Away from the economic calendar, updates from Brexit negotiations ahead of the EU Summit will be key.

At the time of writing, the Pound was down by 0.15% to $1.3045.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. September inflation figures are due out later today.

Barring particularly dire numbers, however, the stats are unlikely to have a material impact on the U.S Dollar. Weak numbers would test market risk sentiment that would be Dollar positive…

Away from the economic calendar, U.S politics will remain the key driver on the day. Updates from Capitol Hill on stimulus talks and U.S Presidential Election campaign chatter will influence.

The Dollar Spot Index was up by 0.12% to 93.176 at the time of writing.

For the Loonie

It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

While there are no material stats, OPEC’s monthly report should provide crude oil prices with direction after last week’s supply disruption driven bounce.  Any doom and gloom on demand and expect the Loonie to struggle.

At the time of writing, the Loonie was down by 0.14% to C$1.3133 against the U.S Dollar.

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