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A Lack of Stats Leaves Market Focus on Trade and Italy

Bob Mason

Earlier in the Day:

It was a relatively quiet Asian session on the economic calendar this morning, with Japan on holiday.

Economic data through the session was limited to New Zealand card retail sales figures for July.

Outside of the numbers, trade war jitters continued to test risk sentiment as the markets also considered what consequences the latest Italian government debacle could have on the stability of the Eurozone.

Kiwi Dollar

Electronic card retail sales fell by 0.1% in July, following a flat June. Economists had forecast a 0.6% rise. According to NZ Stats,

  • The only increase in spending came from a 2.7% rise in spending on fuel that was due to higher fuel prices.
  • For the retail industries, the largest falls were seen in spending on apparel (-3.2%) and durables (-0.9%).

The Kiwi Dollar moved from $0.64655 to $0.64648 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.08% to $0.6473.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.23% to ¥105.45 against the U.S Dollar, while the Aussie Dollar was up by 0.04% to $0.6789.

In the Asian equity markets, the ASX200 struggled at the start of the week, down by 0.21% at the time of writing. The Hang Seng was up by just 0.03% in a choppy session, while the CSI300 was up by 0.96%.

A steady Yuan provided support through the morning.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

A lack of stats will leave the EUR in the hands of geopolitics through the day. While the U.S – China trade war will be a key driver, further updates from Italy will also influence on the day. The coalition government is scheduled to set a date to debate the latest call for a snap general election.

At the time of writing, the EUR was up by 0.06% to $1.1207.

For the Pound

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

A lack of stats will leave the Pound sensitive to any chatter on Brexit, as the markets consider what lies ahead for the UK economy. Last week’s GDP figures will likely force the BoE to consider a near-term move. Any hint of a move could bring the Pound to sub-$1.20 levels.

The latest stats suggest that the pre-Brexit hoarding has come to an end. Imports slid in June and if retail sales slide in July that would likely sink the UK economy into a technical recession.

While Boris Johnson focuses on delivering Brexit, an inheritance of a UK recession would certainly add to the newly appointed PM’s troubles…

At the time of writing, the Pound was up by 0.01% to $1.2034.

Across the Pond

It’s also a quiet day for the Greenback, with no key stats due out of the U.S later today.

Negative sentiment towards the U.S economy, fueled by the escalation in the U.S – China trade war will likely continue to pin back the Greenback.

As the UK economy contracts, expectations are that the U.S economy could suffer the same fate should the U.S – China trade war continue. While there’s plenty of incentive for Trump to find a resolution, backing down may no longer be an option…

At the time of writing, the Dollar Spot Index was up by 0.01% to 97.503.

For the Loonie

It’s a quiet ahead on the economic calendar. There are no material stats due out to provide the Loonie with direction.

Following last week’s disappointing employment figures and the escalation in the U.S – China trade war, it may be time for the BoC to deliver some dovish chatter.

New of the Saudis looking to support crude oil prices provided some much-needed support. It remains to be seen, however, whether a steadying in crude oil prices is enough to prop up the Loonie.

The Loonie was up by 0.02% at C$1.3220, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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