The BoC Puts the Loonie in Focus, while Brexit Keeps the Pound in the Spotlight

by Warrior2

Earlier in the Day:

It’s was a relatively busy start to the week on the economic calendar this morning. The Aussie Dollar was in action early on, with economic data from China also in focus.

For the Aussie Dollar

The Westpac Consumer Sentiment Index rose by 4.1% to 112.0 in December. In November, the index had risen by 2.5% to 107.7.Advertisement

According to the latest Westpac Report,

  • The rebound continued in December, with the Index now sitting 48% above April’s low to reach its highest level since October 2010.

Looking at the Index components:

  • Family finances vs a year ago rose by 6.9% to 96.1, while finances next 12-months fell by 1.8% to 108.9. Both held above their respective averages of 89.2 and 107.4.
  • Economic conditions next 12-months rose by 9.9% to 111.9, with economic conditions next 5-years climbing by 5.9% to 112.1. Both sat above their respective averages of 90.7 and 91.4.
  • Time to buy a major household item rose by 0.7% to 122.2, coming up short of the long-run average of 126.7.
  • In spite of a 5.9% fall in the time to buy a dwelling index, it remained above a long-run average of 119.3.
  • The Unemployment Expectations Index slid by 16.2% to 106.3, pulling further back from a long-run average of 130.2.

The Aussie Dollar moved from $0.74131 to $0.74066 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.07% to $0.7415.

Out of China

November inflation figures were in focus.

Inflationary pressures vanished in November, with consumer prices falling by 0.5%, year-on-year, reversing a 0.5% rise in October. Economists had forecast a 0.8% rise. In the month of November, consumer prices slid by 0.6%, following a 0.3% decline in October. Economists had forecast a 0.2% fall.

Wholesale deflationary pressures eased in November, however. The Producer Price index fell by 1.50%, year-on-year, after having fallen by 2.1% in October. Economists had forecast a 1.80% fall.

The Aussie Dollar moved from $0.74130 to $0.74136 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.02% to ¥104.14 against the U.S Dollar, with the Kiwi Dollar flat at $0.7042.Advertisement

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. German trade data is due out in the early part of the European session.

The numbers are unlikely to have a material impact on the EUR, however, with Brexit in focus.

At the time of writing, the EUR was up by 0.05% to $1.2110.

For the Pound

It’s another 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 continue to leave the Pound in the hands of Brexit updates.

British Prime Minister Boris Johnson is due to meet EU President Ursula von der Leyen today in Brussels. With the British PM willing to remove contentious clauses from the Internal Market Bill, hopes of a deal remain.

Expect plenty of Pound sensitivity to updates from today’s talks, with the EU Summit looming large.

At the time of writing, the Pound was up by 0.10% to $1.3368.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. JOLTs job openings for October are due out later today.

Barring dire numbers, the markets will likely brush aside the figures, however. The market focus will be on COVID-19 vaccine news, updates from Capitol Hill on stimulus, and Brexit. Expect any further chatter on China sanctions to also influence.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.914.

For the Loonie

It’s a quiet but important day ahead on the economic data front. While there are no material stats due out to provide the Loonie with direction, the BoC is in action later today.

Progress towards a COVID-19 vaccine rollout and rising crude oil prices, together with upbeat economic data should prevent any moves. The markets will be looking for some forward guidance, however, with downside risks lingering.

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