Economic data and the Bank of Canada put the euro, GBP and loonie in the spotlight


Early in the day:

This morning was another relatively busy start to the day on the economic calendar. The Australian dollar was the center of attention, with the RBNZ also in action. Later this morning, Japan’s final industrial production figures will also attract attention.

For the Australian dollar

Consumer confidence was at the center of concerns this morning. In July, the Westpac Consumer Confidence Index rose 1.5% to 108.8. Economists were forecasting a drop of 2.5% to 105.0.

According to the latest Westpac report,

Looking at the subcomponents

  • Family finances compared to a year ago increased 4.6% to 93.7, with finances compared to the next 12 months up 2.5% to 109.9.

  • Sentiment towards the short-term economic outlook has improved, with economic conditions for the next 12 months rising 0.8% to 109.5.

  • There was a 3.1% drop in economic conditions over the next 5 years, however, to 110.5.

  • The unemployment expectations index was also disappointing, rising 1.1% to 109.6.

  • Despite this, the time to purchase an important household item increased 3.5% to 120.6.

The Australian dollar fell from $ 0.74430 to $ 0.744250 when the figures were released. At the time of this writing, the Australian dollar was up 0.21% to $ 0.7463.

For the Kiwi Dollar

The RBNZ left the official spot rate unchanged at 0.25% and also left the financing program for loans unchanged, which was in line with market expectations. However, catching the markets by surprise, the RBNZ agreed to end additional asset purchases under the LSAP program by 23e July.

Highlights of the rate statement included:

  • The Committee noted that global economic growth continued to recover, with a positive outlook.

  • Rising vaccination rates in many countries as well as accommodating monetary and fiscal policies have supported household spending.

  • However, health and economic risks persist, as some must reinstate COVID-19 containment measures.

  • Recent economic data indicates that New Zealand’s economy remains robust despite international border restrictions.

  • Overall economic activity is above its pre-COVID-19 level.

  • Since the end of 2020, economic conditions are still stronger than expected.

  • Job growth remained strong, with economic confidence rising from its extreme lows.

  • Exports and domestic spending made up for the lack of international tourists.

  • Short-term inflation spikes are expected to be temporary.

  • The Committee agreed that the significant level of monetary policy support in place since mid-2020 could be reduced earlier.

  • Members agreed that some monetary stimulus is still needed to best ensure that CPI inflation is sustained at the target midpoint of 2% and that employment is at its maximum sustainable level.

The Kiwi dollar fell from $ 0.69690 to $ 0.70030 during the decision. At the time of this writing, the Kiwi Dollar was up 0.95% to $ 0.70140.

For the Japanese yen

Final industrial production figures are expected later this morning.

At the time of this writing, the Japanese Yen was up 0.09% to 110.530 against the US Dollar.

The day to come

For the euro

It’s a relatively busy day on the economic data front. Final June inflation figures for Spain and industrial production figures for the Eurozone are due later this morning.

Expect the industrial production figures for May to attract a lot of attention. Markets have recently become a little worried about the resilience of the economic recovery. Weak numbers will test the euro’s support.

At the time of this writing, the euro was up 0.04% to $ 1.1781.

For the pound

It’s a busier day on the economic calendar, with UK inflation figures due later this morning.

With little else for the markets to consider, expect the pound to be very sensitive to today’s statistics. Lower inflation would ease the pressure on the BoE to make a short-term move.

Outside of the economic calendar, COVID-19 and the Delta variant will remain a short-term driver.

At the time of this writing, the pound was up 0.04% to $ 1.3820.

Across the pond

It’s a calm day ahead on the economic calendar. There are no important statistics from the United States to provide guidance to the markets.

A lack of statistics will leave the greenback in the hands of central bank chatter and market risk sentiment that day.

At the time of this writing, the Dollar Spot Index was down 0.01% to 92.739.

For the loonie

It’s a busier day on the economic data front. Final manufacturing sales figures for May are expected to be released later today.

However, we don’t expect the numbers to influence the Bank of Canada in action this afternoon.

Markets expect the BoC to remain uncompromising on policy, so this will boil down to the Bank’s outlook on the economy and any forward-looking policy orientation.

At the time of this writing, the loonie was up 0.12% to C $ 1.2498 against the US dollar.

For an overview of all of today’s economic events, check out our economic calendar.

This article originally appeared on FX Empire

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