US Markets

A Quiet Economic Calendar Leaves U.S Politics, COVID-19, and Brexit in Focus

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Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar and Aussie Dollar were in action early on, with the PBoC also in the spotlight.

Away from the economic calendar, the markets also responded to the lack of progress on Capitol Hill.

For the Kiwi Dollar

In the 3rd quarter, the NZIER Business Confidence

According to the NZIER Quarterly Survey of Business Opinion,

  • A net 40% of firms expect business conditions to deteriorate in the 3rd quarter, compared with 63% in the previous quarter.
  • The building sector was the most confident, with a net 7% of firms expecting an improvement in the economy near-term.
  • Other sectors were more cautious. While manufacturers were less pessimistic, the service sector was the most pessimistic. A net 49% of services firms expect a worsening in general economic conditions in the coming months.
  • Uncertainty continues to plague the services sector after the adverse effects of lockdown and border restrictions.

The Kiwi Dollar moved from $0.66047 to $0.66027 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.30% to $0.6586.

For the Aussie Dollar

The RBA monetary policy meeting minutes drew interest early this morning.

Salient points from the minutes included:

  • Members observed that the global economy was recovering but that most economies were still some way off pre-pandemic output levels.
  • The continuation of the recovery was dependent upon the containment of the virus.
  • China’s economic recovery was the most advanced, while globally, inflation remained very low and below central bank targets.

Domestically,

  • While Australia saw its largest economic contraction since the 1930s, members noted that the decline in output had been smaller than expected.
  • Labour market conditions had improved, with the unemployment rate likely to peak at a lower rate than previously expected.
  • The RBA expects both unemployment and underemployment to remain high for an extended period of time.
  • Members considered that the economy would need fiscal and monetary support for some time.
  • Members also noted that the effects of monetary policy easing had been impaired as a result of restrictions on activity in parts of the economy.
  • As the economy opens up, however, members considered it reasonable to expect further monetary policy easing to gain more traction.
  • The Board also considered the nature of the forward guidance regarding the cash rate. Given the higher level of uncertainty about inflation dynamics, the Board agreed to place more weight on actual, not forecast, inflation for its decision-making.
  • Members also indicated that they would like to see more than just progress towards full employment before considering an increase in the cash rate.

The Aussie Dollar moved from $0.70559 to $0.70582 upon release of the minutes. At the time of writing, the Aussie Dollar was down by 0.44% to $0.7043.

Out of China

The markets are expecting that the PBoC will leave Loan Prime Rates unchanged this morning. Currently, the 1-year LPR sits at 3.85%, with the 5-year at 4.65%.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.10% ¥105.54 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Wholesale inflation figures for September are due out of Germany.

We don’t expect too much influence on the EUR, however, with COVID-19 numbers and any Brexit chatter in focus.

At the time of writing, the EUR was up by 0.02% to $1.1771.

For the Pound

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

The lack of stats will leave any further chatter on Brexit and updates on COVID-19 in focus.

While Downing Street announced an end to negotiations, the markets are expecting talks to resume. Boris Johnson left the door open for further talks, though it remains to be seen whether the EU will compromise…

At the time of writing, the Pound was flat at $1.2948.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar.

September building permits and housing starts are due out later this afternoon.

Barring particularly dire numbers, we would expect the markets to brush aside the numbers.

The focus will be on the U.S Presidential Election polls, the Senate polls, and chatter from Capitol Hill.

Expect updates on COVID-19 to also influence on the day.

At the time of writing, the Dollar Spot Index was down by 0.02% to 93.404.

For the Loonie

It’s a particularly quiet day ahead. There are no key stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of COVID-19 and U.S politics on the day. A continued rise in new COVID-19 cases will continue to test support for the Loonie.

At the time of writing, the Loonie was up by 0.02% to C$1.3190 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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