While economic data through the day will provide direction for the EUR and GBP, any trade chatter from the Oval Office or Beijing will overshadow the stats, as the markets look for a sign on whether a trade war can be averted.
Earlier in the Day:
Economic data released through the Asian session was on the lighter side this morning, with key stats being limited to Australia’s February trade figures.
Australia’s trade surplus narrowed from a downwardly revised A$0.952bn to A$0.825bn in February, coming in ahead of a forecasted narrowing to A$0.300bn, according to figures released by the ABS.
- Exports of goods and services increased by just A$2m to $34,229m in February, month-on-month.
- While the export of rural goods increased by A$552m (+17%), the export of non-monetary gold slid by A$505m (-23%), with the export of non-rural goods falling by A$90m, offsetting the rise in rural goods exports.
- Service credits increased by A$45m (+1%), with the net export of goods under merchanting unchanged at A$7m.
- Imports of goods and services increased by $130m to $33,405m, month-on-month.
- Imports of consumption goods increased by A$547m (+7%), with the import of non-monetary gold and capital goods rising by A$70 (+17%) and A$60m (+1%) respectively. An A$657m (-6%) fall in the import of intermediate and other merchandise goods offset the increases, while service debits rose by A$110m (+1%).
The Aussie Dollar moved from $0.77045 to $0.77037 upon release of the figures, with the figures having a relatively muted impact through the morning, leading the Aussie Dollar down 0.35% to $0.7689 at the time of writing, lingering concerns over trade pinning back the Aussie Dollar.
Elsewhere, the Japanese Yen was down 0.14% to ¥106.92 against the U.S Dollar as fears over a full blown trade war between the U.S and China eased overnight, with the U.S administration having extended an olive branch to get talks going.
The Kiwi Dollar was down 0.16% to $0.7293, partially reversing Wednesday’s 0.68% rally, with easing fears over trade talks weighing as the U.S Dollar looks to recover losses.
In the equity markets, with the Chinese and HK markets closed, it was down to the Nikkei and ASX200 to respond to the latest updates from the U.S and China on trade, the pair up 1.77% and 0.67% respectively, taking their cues from the U.S markets, with the Nikkei getting an extra boost from the softer Yen through the session.
The Day Ahead:
For the EUR, economic data out of the Eurozone this morning includes Germany’s February factory orders, member state and the Eurozone’s finalized service sector PMI figures, together with the Eurozone’s retail sales numbers for February.
Following some disappointing manufacturing PMI numbers released on Tuesday, forecasts out of Italy and Spain are for slower growth in the services sector, which will be EUR negative, with any downward revisions to France, Germany or the Eurozone’s PMI number likely to lead to raise some concern over the near-term outlook, following softer PMI numbers out of both China and the U.S earlier in the week.
For German factory orders, the numbers will need to be positive, following January’s 3.9% slide, any further weakness in the figures another question mark over the near-term outlook for the Eurozone economy, while the Eurozone’s retail sales figures are likely to weigh, following Germany’s slide in retail sales in February.
At the time of writing, the EUR was down 0.02% to $1.2279, with today’s stats and noise from Beijing and the Oval Office the key drivers through the day, the data likely to be overshadowed should tensions U.S – China tensions rise.
For the Pound, economic data is limited to March services PMI numbers, which will need to impress following the contraction in the construction sector, according to figures released on Wednesday.
The service sector is key to the UK economy and any softer numbers will raise doubts over a BoE move next month, though we will expect the devil to be in details, with any pickup in new orders, price inflation and the pace hiring likely to offset any softer headline numbers.
Outside of the data, the market will need to be ever conscious of Brexit chatter and of course the ongoing trade spat between the U.S and China.
At the time of writing, the Pound was down 0.06% to $1.4070, with today’s services PMI likely to be the key driver, barring any negative news hitting the news wires.
Across the Pond, following some more disappointing private sector PMI numbers on Wednesday, economic data scheduled for release this afternoon includes the weekly jobless claims numbers and February’s trade balance.
With all of the trade noise at present, the trade balance with China will likely be sliced and diced, though noise from the Oval Office and from Beijing will be of greater significance through the day.
At the time of writing, the Dollar Spot Index was up 0.03% to 90.168, supported by hopes across the financial markets of China and the U.S being able to come to an agreement on trade.
Across the border, the Loonie will also be in focus this afternoon, with Canada’s February trade figures scheduled for release. In line with or worse than forecasted will be a negative for the Loonie that has been on a roll as sentiment towards NAFTA negotiations continues to improve. Any material declines in the Loonie may well be on hold in hopes of a favourable end to the NAFTA rewrite.
At the time of writing, the Loonie was at C$1.2770 against the U.S Dollar.