The Weekly Wrap – A Busy Economic Calendar Delivered Support for the Greenback

The Stats

It was a busy week on the economic calendar, in the week ending 11^th September.

A total of 78 stats were monitored, following 47 stats from the week prior.

Of the 78 stats, 34 came in ahead forecasts, while 38 economic indicators came up short of forecasts. 6 stats were in line with forecasts in the week.

Looking at the numbers, 34 of the stats also reflected an upward trend from previous figures. Of the remaining 44, 39 stats reflected a deterioration from previous.

For the Greenback, it was a back into the green. After a bearish start to the week, 3 days in the green out of 4 partially reversed losses from the previous week. In the week ending 4^th September, the Dollar Spot Index rose by 0.38% to 92.719. In the week prior, the Dollar Spot Index had fallen by 0.94% to 92.371.

Out of the U.S

It was another busy week on the economic data front.

Key stats in the week included August private sector PMIs, the weekly jobless claims, and the all-important nonfarm payrolls.

It was a mixed bag on the economic data front but ultimately enough to prevent another Dollar slide.

The ISM manufacturing PMI rose from 54.2 to 56.0 in August, while the non-manufacturing PMI fell from 58.1 to 56.9.

While service sector activity remains key, the combined figures were ultimately relief for the markets.

The weekly jobless claims also provided some comfort, with initial jobless claims easing to 881k in the week ending 28^th August.

It ultimately boiled down to the Friday numbers, however, from the economic calendar.

While nonfarm payrolls saw a smaller increase than in July, another 1.371m rise was good enough. That was coupled with a fall in the U.S unemployment rate from 10.2% to 8.4%.

From the Dollar’s perspective, it was not the stats but ultimately central bankers that delivered the Dollar’s upside.

ECB member Lane jawboned the EUR on Tuesday, reminding the markets that central bank action is not one-sided…

In the equity markets, the NASDAQ and S&P500 slid by 2.31% and by 3.27% respectively. The Dow ended the week down by a more modest 1.82%.

Out of the UK

It was a quiet week on the economic calendar. Key stats included finalized August private sector PMIs and August’s construction PMI.

The stats were skewed to the negative in the week.

Finalized PMIs were revised downwards from prelim, with the construction PMI also reflecting softer growth.

On the monetary policy front, the chatter was gloomy. Central bankers expected the economy to see a more material contraction than forecasted back in June.

The combination of the gloomy economic outlook and the downward revisions to the PMIs weighed on the Pound.

Negative chatter towards Brexit added to the downside in the week.

In the week, the Pound fell by 0.55% to $1.3279. In the week prior, the Pound had rallied by 2.00% to $1.3352.

The FTSE100 ended the week down by 2.76%, following on from a 0.64% decline from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Prelim August inflation, August manufacturing PMIs, and unemployment figures were in focus early in the week.

Inflation and manufacturing PMIs disappointed early in the week. It could have been worse. Unemployment numbers for Germany and the Eurozone provided the EUR with some support early on.

Ultimately, however, it wasn’t the stats that led to a reversal in the EUR.

Central bank commentary led to a pullback from $1.20 levels hit on Tuesday. The comments came ahead of next week’s ECB press conference where Lagarde could deliver a Draghi master class.

Mid-week, German retail sales also failed to impress, with sales falling in July.

To make matters worse, service sector PMIs for August also raised red flags on Thursday, as did Eurozone retail sales figures.

The service sector PMIs and retail sales figures questioned the ECB’s hope of a service sector and consumption-driven recovery.

At the end of the week, factory order numbers for July were relatively upbeat. This was aligned with PMI numbers for Germany that stood out from the pack.

For the week, the EUR fell by 0.55% to $1.1838, partially reversing a 0.90% gain from the previous week.

For the European major indexes, it was a bearish week. The EuroStoxx600 and DAX30 ended the week down by 1.86% and 1.46% respectively, with the CAC40 falling by 0.76%.

For the Loonie

It was a busier week on the economic calendar.

Key stats included July trade data and August employment and Ivey PMI figures.

It was a mixed bag on the economic data front, though ultimately support the Loonie.

In July, the trade deficit widened, with the pace of employment slowing in August. In spite of the pace slowing, employment rose by 245.8k in August, bringing the unemployment rate down from 10.9% to 10.2%.

The Ivey PMI also reflected a slower pace of growth in August, though nothing alarming, with the PMI coming in at 67.8. In July, the PMI had stood at 68.5.

The Loonie rose by 0.28% to end the week at C$1.3099. In the week prior, the Loonie had risen by 0.59%. The upside came from a 0.50% rally on Friday, with a slide in oil prices doing little on the day.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 4^th September, the Aussie Dollar slid by 1.13% to $0.7282, with the Kiwi Dollar declining by 0.33% to $0.6721.

For the Aussie Dollar

It was a busy week for the Aussie Dollar on the economic calendar.

Early in the week, company gross operating profit and July private sector credit figures were in focus.

The stats were positive, with profits jumping by 15% and private sector credit seeing a modest 0.1% decline.

The focus then shifted to the RBA, with the September monetary policy decision on Tuesday. While holding cash rates unchanged, the RBA expanded the Term Funding Facility.

There was little response from the Aussie Dollar, however.

In the 2^nd half of the week, economic data did influence, with GDP, trade, and retail sales figures in focus.

2^nd quarter GDP figures suggested that the RBA may need to shift from its base case scenario. The economy contracted by 7% in the quarter.

Trade data also failed to impress, with the trade surplus narrowing from A$8.202bn to A$4.607bn in July.

Retail sales provided some support at the end of the week, with sales rising by 3.2% in July.

With the RBA focused on COVID-19 and consumer spending, plenty of uncertainty remains in spite of Friday’s stats.

For the Kiwi Dollar

It was a quieter week on the economic calendar.

Key stats included August’s business confidence and July building consent figures.

The stats were Kiwi Dollar negative, with business confidence waning and building consents sliding.

In August, the ANZ Business Confidence Index fell from -31.8 to -42.4, with the own activity indicator falling by 8 points to -17%.

It wasn’t much better for building consents, which slid by 4.5% in July. Relatively positive private sector PMIs from China limited the downside for the Kiwi, however.

For the Japanese Yen

It was a busier week on the economic calendar, with the stats relatively upbeat.

Industrial production jumped by 8% in July, with retail sales rising by 1%. Both sets of numbers came in well ahead of forecasts.

Service sector activity also avoided a more marked rate of contraction in August. The PMI slipped from 45.4 to 45.0, with the finalized number unchanged from prelim.

On the negative, however, was an 11.3% slide in capital spending in the 2^nd quarter.

While the stats were skewed to the positive, it was Dollar strength that ultimately left the Yen in the red.

The Japanese Yen fell by 0.83% to ¥106.24 against the U.S Dollar. In the week prior, the Yen had risen by 0.41%.

Out of China

It was a busier week on the economic data front.

Key stats included August’s NBS and Caixin private sector PMIs.

The stats delivered mixed results in the week.

While the NBS Manufacturing PMI slipped from 51.1 to 51.0, the Caixin Manufacturing PMI rose from 52.8 to 53.1.

The NBS Non-Manufacturing PMI rose from 54.2 to 55.2, while the Caixin Services PMI slipped from 54.1 to 54.0.

All in all, some positive numbers, with private sector activity ultimately seeing a further pickup in growth.

In the week ending 4^th September, the Chinese Yuan rose by 0.34% to CNY6.8425. In the week prior, the Yuan had risen by 0.78%.

The upside in the Yuan coincides with Beijing’s ramping up of U.S agri imports and the promise to stick to the phase 1 agreement.

The CSI300 and the Hang Seng joined the broader market in the red, with losses of 1.53% and 2.86% respectively.