UK Retail Sales and Brexit News Leaves Focus on the Pound

Earlier in the Day:

Economic data released through the Asian session this morning included September trade figures out of Japan and September employment and quarterly business confidence numbers out of Australia.

For the Japanese Yen, the August’s ¥438bn deficit rebounded to a ¥140bn surplus, which was better than a forecasted narrowing to a ¥50bn deficit.

• Exports fell by 1.9%, year-on-year, following August’s 6.6% rise, which was worse than a forecasted 1.9% rise, the decline attributed to natural disasters that included a Typhoon and an earthquake.
• Imports rose by 7%, coming up short of a forecasted 13.7% rise and August 15.3% increase, rising fuel prices continuing to drive imports.
• The adjusted trade deficit widened from ¥19tn to ¥24tn, which was better than a forecasted widening to a ¥34tn deficit.

The numbers may have provided little guidance on where Japan’s trade fuelled economy is heading, with an earthquake and a typhoon likely to have impacted exports, but concerns will linger over the effects of the ongoing trade war between the U.S and China and slower growth in the Chinese economy. Exports to China fell by 1.7%, by 4.1% to the EU and down by just 0.2% to the U.S, suggesting weaker demand may have contributed to the China and EU numbers.

The Japanese Yen moved from ¥112.643 to ¥112.602 against the Dollar upon release of the figures, before rising to ¥112.54 against the Dollar at the time of writing, up 0.10% for the session.

For the Aussie Dollar, the NAB Business Confidence Index fell from 7 to 3, while of greater significance were the September employment numbers:

According to the ABS, the unemployment rate from 5.3% to 5.0% in September, which was better than a forecasted hold, with full employment rising by 20.3K, following August’s upwardly revised 35.2K increase. Employment however increased by just 5.6K, falling short of a forecasted 15.2K increase, following an upwardly revised 44K increase in August.

• While full-time employment was on the rise, part-time employment fell by 14.7K.
• Contributing to the fall in the unemployment rate was a 0.2 percentage point fall in the participation rate 65.4%.

The Aussie Dollar moved from $0.71153 to $0.71241 upon release of the figures, before easing to $0.7117 at the time of writing, up 0.11% for the session, the Aussie Dollar finding some respite following Wednesday’s reversal.

Elsewhere, the Kiwi Dollar was down 0.18% to $0.6538 at the time of writing, a hawkish set of FOMC meeting minutes weighing in the early part of the day.

The Day Ahead:

For the EUR, there are no material stats scheduled for release through the day, leaving the markets to consider some disappointing economic numbers out of the region of late and the slide in imports from Japan, which could be further evidence that the economy has peaked, though October numbers will be need to confirm this.

On the political front, more noise over the Italian Coalition government’s budget suggests that the European Commission is likely to reject the budget plan and, while this is a negative for the EUR, of greater significance will be the coalition government’s response.

At the time of writing, the EUR was down 0.04% to $1.1496, geo-political risk the key driver.

For the Pound, it’s another big day on the data front, with UK retail sales figures scheduled for release early in European session, retail sales forecasted to fall in September to weigh on the Pound, which remains under pressure following the softer inflation figures released on Wednesday.

Outside the numbers, Brexit news will be a factor to consider as the UK government looks for alternatives to address the ongoing disagreements over Northern Ireland.

At the time of writing, the Pound was down 0.14% to $1.3096.

Across the Pond, economic data scheduled for release includes Philly FED manufacturing numbers for October, together with the weekly jobless claims figures. Focus will be on the manufacturing numbers that will need to hold relatively steady to avoid a Dollar sell-off, the markets sensitive to any signs of a slowdown in the U.S economy as the trade war with China sees no end in sight.

Outside of the stats, FOMC members Bullard and Quarles are scheduled to speak through the day, though following Wednesday’s release of the FOMC minutes, there’s unlikely to be a material influence on the Dollar.

At the time of writing, the Dollar Spot Index was up 0.09% to 95.661.

For the Loonie, it’s another quiet day on the data front, leaving the Loonie in the hands of market risk sentiment and direction of crude oil prices, which contributed to the Loonie’s latest reversal, as crude oil prices took a tumble overnight.

The Loonie down 0.15% to C$1.3039 against the U.S Dollar at the time of writing.