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Inflation Numbers Put the Dollar and the Pound in the Spotlight


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Earlier in the Day:

Economic data released through the Asian session this morning was limited to consumer sentiment figures out of Australia and inflation expectation numbers out of New Zealand.

Outside of the numbers, the RBNZ delivered its heavily anticipated policy statements and press conference, whilst holding interest rates unchanged, as had been forecasted.

For the Aussie Dollar,

The Westpac Consumer Sentiment Index rose by 4.3% in February, reversing January's 4.7% slide. The index rose from January's 99.6 to 103.8, placing the index into the hands of the optimists.

Looking at the sub-Indexes, there were some major gains:

  • Economic conditions next 12mths rallied by 7%, with family finances next 12-months (+5.5%) and family finances vs a year ago (+5.6%) both seeing solid gains.
  • Economic conditions next 5yrs rose by 3.8%, leaving it in the red year-on-year. The time to buy a major household item sub-index rose by just 0.3% to leave it down by 4.3% compared with a year ago.
  • Negative sentiment towards the housing market saw the time to buy a dwelling index fall by 1.9%, while still up by 8.6% compared with a year ago.
  • The Unemployment Expectations Index fell by 2.9% to take it into negative territory year-on-year.

Improved sentiment was attributed to the RBA's shift in policy outlook and fewer expecting mortgage rates to rise over the coming 6-months.

The Aussie Dollar moved from $0.70996 to $0.71048 upon release of the figures. At the time of writing, the Aussie Dollar stood at $0.7128, up by 0.47% for the session.

For the Kiwi Dollar,

While the RBNZ held rates unchanged, as had been forecasted, the outlook for growth was far more hawkish than the markets had expected. RBNZ Governor Orr's statement delivered further strength for the Kiwi Dollar, the press conference coming after the release of the rate statement and monetary policy statement.

An expectation of a pickup in economic growth through 2019 was the key driver, the outlook in stark contrast to that of other central banks, including the RBA and ECB.

The Kiwi Dollar moved from $0.67275 to $0.68216 through the release of the statements and the press conference.

At the time of writing, the Kiwi Dollar stood at $0.6838, a gain of 1.51% for the session.

Elsewhere,

The Japanese Yen was down by 0.14% to ¥110.63 against the U.S Dollar. Market risk appetite weighed in the early part of the day, as sentiment towards the U.S - China trade talks improved.

The Day Ahead:

For the EUR

Economic data scheduled for release later this morning is limited to December industrial production numbers out of the Eurozone. Following some disappointing figures out of Germany, forecasts are for more disappointment that would likely pin back the EUR in the early part of the day.

Outside of the numbers, market risk appetite and updates on trade talks will continue to be the key driver mid-week.

At the time of writing, the EUR up by 0.05% at $1.1332, early support coming from the risk-on sentiment.

For the Pound

It's a big day on the data front, with January inflation numbers scheduled for release. Following disappointing GDP numbers released on Monday, the Pound could be in for another slide should the numbers be in line with or worse than forecast.

With Theresa May seeming to have come out of the cold, support for a deal seeming to build this week, the Pound may ultimately be able to brush off any softer inflation numbers. After all, the disappointing GDP numbers should have already put the brakes on any hope of a 2019 rate hike, assuming that Britain leaves the EU with a deal in hand.

At the time of writing, the Pound was up 0.17% at $1.2914.

Across the Pond

Economic data scheduled for release includes January inflation numbers that will have a material impact on the Dollar later today.

The focus will be on the annual core rate of inflation, which is forecasted to come in slightly softer at 2.1%. Any deviation from forecast and expect a Dollar response

Outside of the numbers, expect more influence from Beijing and the Oval Office. The 1 st March deadline is rapidly approaching and China's Premier Xi is now also scheduled to get involved at the end of the week to move things along.

At the time of writing, the Dollar Spot Index was down by 0.03% to 96.679.

For the Loonie

There are no material stats scheduled for release through the day. Crude oil prices will be the main driver throughout the day. Upbeat sentiment towards the U.S - China trade talks have provided early support to risk sentiment, giving the Loonie a positive start to the day.

The Loonie was up by 0.20% to C$1.3211, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Currencies , Oil , Commodities , US Markets
Referenced Symbols: USO , DBO , USL



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