Yahoo Finance Brexit and a Heavy Set of Stats Puts Focus on the GBP
Earlier in the Day:
Economic data released through the Asian session this morning included July current account and 2nd quarter, finalized GDP numbers out of Japan, together with August inflation figures out of China.
For the Japanese Yen,
The non-seasonally adjusted current account surplus widened from ¥1.176tn to ¥2.010tn in July, while narrowing from ¥1.176tn to ¥1.48tn according to seasonally adjusted figures.
On the GDP numbers, the economy grew by 3% year-on-year, according to finalized figures, which was better than a forecasted 2.6% rise and prelim 1.9%. Quarter-on-quarter, the economy grew by 0.7%, which was in line with forecasts, whilst revised upwards from a prelim 0.5%.
The upward revision to growth was attributed to a larger increase in capital expenditure, with capital expenditure rising by 3.1%, up from a prelim 1.3% to reflect the fastest economic growth since the 1st quarter of 2016.
While trade dragged on the economy in the 2nd quarter, domestic consumption contributed, rising by 0.7%.
The Japanese Yen moved from ¥110.892 to ¥110.954 against the Dollar upon release of the figures, before easing to ¥110.99 at the time of writing, flat against the Dollar through the early part of the session.
Out of China,
The annual rate of inflation stood at 2.3% in August, picking up from July’s 2.1%, while also coming in ahead of a forecasted 2.2%, with consumer prices rising by 0.7% month-on-month. The annual rate of wholesale price inflation eased from 4.6% to 4.1%, which was better than a forecasted 4%.
The pickup in the annual rate of inflation was attributed to rising prices for vegetables and non-food prices that were drive by a jump in prices for gasoline and diesel.
The Aussie Dollar moved from $0.71116 to $0.71097 upon release of the figures, before easing to $0.7105 at the time of writing, down 0.03% for the session.
Elsewhere, the Kiwi Dollar was down 0.29% to $0.6515, the Kiwi continuing to struggle with a lack of stats of late to stop the rot, as trade war jitters pin back the commodity currencies.
In the equity markets, it was another mixed bag, with the Hang Seng and CSI300 seeing more heavy losses, the pair down 1.02% and 0.83% respectively as the markets respond to the threat of more tariffs on China, while the Nikkei and ASX200 were up 0.03% and 0.07% respectively, the ASX200 looking to end a 7-day losing streak.
Trade data out of China over the weekend raised yet more red flags, with China’s trade surplus with the U.S widening even further, exporters looking to get goods out before tariffs become effective, leading to the skewed numbers, with the outlook continuing to get darker for the Chinese economy and emerging economies heavily reliant upon demand from China.
China’s total exports rose by 9.8% in August, falling short of a forecasted 10% and slowing from July’s 12.2%, while imports surged by 20%, following Julys’ 27.3% rise, coming in ahead of a forecasted 18.7%, the jump in imports likely to be driven by the need for manufacturers to beat U.S tariff roll outs, while there will be some support from domestic consumption.
The Day Ahead:
For the EUR, there are no material stats scheduled for release out of the Eurozone to provide direction through the day, leaving the EUR in the hands of market risk appetite and sentiment towards the Italian government’s plans on loosening the purse strings and trade, the EU not yet free from possible Trump action.
At the time of writing, the EUR was down 0.03% to $1.1549.
For the Pound, economic data is on the heavier side, with key stats due out later this morning including July industrial and manufacturing production and trade data together with GDP numbers that are forecasted to be a positive for the Pound, while July production and trade data are expected to be a negative.
Outside of the numbers, Brexit chatter will also be of influence through the day, volatility in the Pound expected to pick-up as mixed updates from the EU and the UK negotiators hits the wires in the weeks ahead.
At the time of writing, the Pound was down 0.02% to $1.2918.
Across the Pond, it’s a quiet day for the Dollar, with no material stats scheduled for release through the day to provide direction, leaving the Dollar firmly in the hands of the Oval Office. With Japan being thrown into the limelight on trade and the threat of yet more tariffs on China, there may well be more support for the Dollar.
While the Oval Office will likely be of greatest influence, FOMC member Bostic is also scheduled to speak late in the day that could provide some upside for the Dollar should there be support for two further rate hikes this year, last week’s nonfarm payroll and wage growth figures having impressed.
At the time of writing, the Dollar Spot Index was up 0.08% to 95.438, recovering from an early pullback, supported by Friday’s solid labour market numbers.
For the Loonie, there are no material stats scheduled for release this afternoon, leaving the Loonie in the hands of market risk appetite and progress on NAFTA talks.
At the time of writing, the Loonie was down 0.16% to C$1.3182 against the U.S Dollar.
This article was originally posted on FX Empire
