It’s a busy day ahead on the economic calendar. Private sector PMIs will give the markets an idea of what impact the 2nd wave has had on the private sector.
Earlier in the Day:
It’s was a busy start to the day on the economic calendar this morning. The Kiwi Dollar, the Aussie Dollar, and the Japanese Yen were in action early this morning.

For the Kiwi Dollar
New Zealand’s Business PMI slipped from 55.3 to 48.7 in December.
The Kiwi Dollar moved from $0.72024 to $0.71974 upon release of the PMI that preceded 4th quarter inflation figures.

In the 4th quarter, the annual rate of inflation held steady at 1.4%. Economists had forecast a softening to 1.0%.

Quarter-on-quarter, consumer prices rose by 0.5%, following a 0.7% increase in the 3rd quarter. Economists had forecast a 0.1% rise.

According to NZ Stats,

Higher prices for domestic accommodation, building a new home, and used cards supported the 0.5% rise in consumer prices.
Quarter-on-quarter, domestic accommodation services prices jumped by 20% and by 6.2% annually.
Prices for used cars rose by 4.6%, which was the largest quarterly increase since Dec-1997.
The cost for building a house increased by 1.3% in the quarter and by 3.3% year-on-year.
The Kiwi Dollar moved from $0.71974 to $0.72102 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.01% to $0.7215.

For the Japanese Yen
Inflation and private sector PMI figures were in focus this morning.

In December, deflationary pressures persisted, with core consumer prices falling by 1.0% year-on-year. In November, core consumer prices had also fallen by 0.9%. Economists had forecast a 1.1% decline.

The Japanese Yen moved from ¥103.495 to ¥103.514 upon release of the figures that preceded the PMI numbers.

In January, the Manufacturing PMI slipped from 50.0 to 49.7, with the Services PMI falling from 47.7 to 45.7. Economists had forecast prelim PMIs of 50.9 and 49.5 respectively.

According to the prelim Survey,

Rising COVID-19 cases weighed on the private sector in early January.
New orders saw a stronger decline at composite level. This was as a result of a stronger decline in the services sector. The Manufacturing sector saw a pickup in new orders after a decline in December.
New export orders also saw a stronger decline at composite level. While new orders across the manufacturing sector saw a softer decline, service sector firms reported a stronger decline.
Employment across the manufacturing sector declined after growth in December. There was a steady pace of decline in job shedding across the services sector.
In terms of optimism, both the manufacturing and the service sectors had weaker positive outlooks.
The Japanese Yen moved from ¥103.563 to ¥103.541 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥103.57 against the U.S Dollar.

For the Aussie Dollar
Retail sales were in focus this morning.

Retail sales slid by 4.2% in January, according to prelim figures, partially reversing a 7.1% jump in December. Economists had forecast a 2.5% decline.

According to the ABS,

Compared with December 2019, turnover was up by 9.4%.
Household goods retailing, other retailing, department stores, and clothing, footwear, and personal accessory retailing fell.
Food retailing also fell in December, with COVID-19 restrictions on household gatherings weighing.
Cafes, restaurants, and takeaway food services was the only industry to rise.
Victoria led the decline, with retail sales sliding by 7% after a 22% jump in November.
The Aussie Dollar moved from $0.77667 to $0.77669 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.09% to $0.7757.
The Day Ahead:
For the EUR
It’s a busy day ahead on the economic calendar. Prelim January private sector PMI figures for France, Germany, and the Eurozone are due out later today.

While Germany’s manufacturing and the Eurozone’s PMI will be key drivers, any weak numbers would test support for the EUR.

With lockdown measures continuing into January, service sector activity will likely take a hit. To what extent and whether the manufacturing sector is also affected remains to be seen…

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

At the time of writing, the EUR was up by 0.02% to $1.2167.

For the Pound
It’s a busy day ahead on the economic calendar. December retail sales and January prelim private sector PMI figures are due out today.

Expect the retail sales and services PMI to be the key drivers, with lockdown measures in place.

At the time of writing, the Pound was down by 0.06% to $1.3725.

Across the Pond
It’s a relatively busy day ahead on the economic calendar. Key stats include private sector PMI figures for January and December existing home sales figures.

Expect January’s prelim services PMI to be the key driver.

Away from the economic calendar, policy decisions from the Oval Office together with COVID-19 news updates will also influence.

At the time of writing, the Dollar Spot Index was down by 0.01% to 90.124.

For the Loonie
It’s a relatively quiet day on the economic data front. November retail sales figures are due out of Canada later today.

While we can expect some Loonie sensitivity to the numbers, direction on the day will be hinged on vaccination rates and new COVID-19 cases.

Expect crude oil inventory figures to also influence following the disappointing API numbers.

At the time of writing, the Loonie was down by 0.12% to C$1.2652 against the U.S Dollar.

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