Inauguration Day and the Bank of Canada Put the Greenback and the Loonie in Focus

by Warrior2

It’s Inauguration Day, with all eyes on Capitol Hill. On the monetary policy front, the BoC is in action, with economic data from the UK also in focus later today.

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and the PBoC were in action early this morning.

For the Aussie Dollar

The Westpac Consumer Confidence Index fell by 4.5% to 107.0 in January. In December, the Index had stood at 112.0.

According to the January report,

  • Domestic border closures and COVID-19 clusters together with a sharp rise in new COVID-19 cases overseas weighed on sentiment.
  • In spite of the fall, the index is up by 14.6% from a year ago and stood 41.5% higher than the pandemic low last April.

Looking at the key components:

  • Economic conditions next 12-months slid by 8.3%, with family finances vs a year ago falling by 7.0%.
  • In spite of the decline both were up compared with a year ago.
  • Family finances next 12-months saw a more modest 0.3% decline, with economic conditions next 5-years down by 4.5%.
  • Compared with this time last year, economic conditions next 5-years was up by 31.6%, with economic conditions next 12-months up by 21.1%.
  • Time to buy a major household item was down by 2.8%, while up by 4.8% compared with this time last year.
  • Time to buy a dwelling bucked the trend, however, rising by 0.2%. This was supported by sentiment towards house prices.
  • The House Price Expectations Index increased by 1.1%.
  • Sentiment towards unemployment was disappointing, however. The Unemployment Expectations Index was up by 11.9%, while down by 11.2% compared with a year ago.

The Aussie Dollar moved from $0.77100 to $0.77102 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7711.

From China

This morning, the PBoC left loan prime rates unchanged in the central bank’s first monetary policy decision of the year.

In line with market expectations, the 1-year LPR remained unchanged at 3.85%, with the 5-year unchanged at 4.65%.

The Aussie Dollar moved from $0.77026 to $0.77072 upon announcement of the decision.


At the time of writing, the Japanese Yen was up by 0.13% to ¥103.77 against the U.S Dollar, with the Kiwi Dollar up by 0.04% to $0.7125.Advertisement

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German wholesale inflation figures for December and finalized December inflation figures for the Eurozone are due out later today.

Barring marked revision from prelim Eurozone inflation figures, we don’t expect the stats to have too much influence, however.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures and Italian politics will provide direction.

At the time of writing, the EUR was up by 0.10% to $1.2141.

For the Pound

It’s a relatively busy day ahead on the economic calendar. December inflation and wholesale inflation figures are due out of the UK later today.

A pickup in inflationary pressures should deliver support for the Pound. Wholesale inflationary pressures will also need to see a pickup, however.

While the stats will influence, the market focus will remain on the UK Government’s progress towards ending the COVID-19 pandemic.

At the time of writing, the Pound was up by 0.12% to $1.3647.

Across the Pond

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Greenback and the broader markets with direction.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

It’s Inauguration Day, so expect market focus to be on Capitol Hill. Upon entering the Oval Office, Biden is expected to begin repealing Trump policy.

At the time of writing, the Dollar Spot Index was down by 0.12% to 90.388.

For the Loonie

It’s a busy day on the economic data front. December inflation figures are due out ahead of the Bank of Canada’s first monetary policy decision of the year.

With the markets likely to hold out for the BoC rate statement and press conference, inflation figures will likely have a relatively muted impact on the Loonie.

Rising crude oil prices and optimism towards the economic outlook is likely to leave the BoC in a holding pattern. It remains to be seen, however, whether there’s any hawkish chatter.

At the time of writing, the Loonie was up by 0.11% to C$1.2721 against the U.S Dollar.

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