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Bob Mason
US Economy

The Stats

It was a busy week on the economic calendar, in the week ending 7th August.

A total of 59 stats were monitored, following 56 stats from the week prior.

Of the 59 stats, 38 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. Just 2 stats were in line with forecasts in the week.

Looking at the numbers, 35 of the stats reflected an upward trend from previous figures. Of the remaining 24, 22 stats reflected a deterioration from previous.

For the Greenback, a run of 6 consecutive weeks in the red came to an end. In the week ending 7th August, the Dollar Spot Index rose by 0.09% to 93.435. A 0.70% rally on Friday delivered the upside for the week. In the week prior, the Dollar had fallen by 1.15%.

Positive economic data from the U.S supported a recovery of losses from earlier in the week.

With corporate earnings, economic data, updates on the U.S stimulus package in focus, COVID-19 took a back seat in the week.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 19,541,219 for Friday, rising from last Friday’s 17,731,850 total cases. Week-on-week, the total number of cases was up by 1,809,369 on a global basis. This was higher than the previous week’s increase of 1,801,071 in new cases.

In the U.S, the total rose by 392,750 to 5,095,524. In the week prior, the total number of new cases had risen by 454,463.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 33,709 to bring total infections to 827,513. In the previous week, the total number of new cases had risen by 22,753. Spain alone reported 25,840 new cases in the week.

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Out of the U.S

It was another busy week on the economic data front.

In the 1st half of the week, private sector PMIs impressed. The ISM Manufacturing and Non-Manufacturing PMIs both increased in July supporting riskier assets.

On Thursday, the initial jobless claims eased back for the 1st time in 3-weeks adding further support.

Friday’s labor market numbers were the main event of the week, however.

Nonfarm payrolls rose by a better than expected 1,763k, with the unemployment rate falling to 10.2%.

It was enough to deliver a weekly gain for the Dollar and support the U.S equity markets.

In the equity markets, the NASDAQ and S&P500 rose by 2.45% and by 2.47% respectively. The Dow led the way, however, rallying by 3.80%.

Out of the UK

It was a relatively quiet week on the economic calendar. Finalized private sector PMIs for July were in focus over the week. The stats were skewed to the negative, with the manufacturing, services, and composite PMIs seeing downward revisions.

A rise in the construction PMI was the only positive in the week.

The main event of the week, however, was the BoE’s monetary policy decision. In line with market expectations, the Bank left rates unchanged. It was a gloomy outlook, however, that tested support on Thursday.

The Bank stated that it does not anticipate an economic recovery to pre-COVID-19 levels until the end of next year.

A surge in unemployment is also expected once the furlough scheme ends in October.

In the week, the Pound fell by 0.25% to $1.3052. It wasn’t the BoE but a bounce in the Dollar on Friday that delivered the loss, however. In the week prior, the Pound had rallied by 2.27% to $1.3085.

The FTSE100 ended the week up by 2.28%, partially reversing a 3.69% slide from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, July’s private sector PMIs were in focus.

Positive manufacturing numbers from Italy and Spain and upward revisions from prelims for France, Germany, and the Eurozone were EUR positive.

Service sector numbers were mixed, however. While the PMIs from Italy and Spain beat forecasts, downward revisions to prelim figures were EUR negative.

In the 2nd half of the week, the stats were skewed to the positive, with Germany in focus.

Factory orders, industrial production, and trade data were EUR positive.

For the week, the EUR rose just 0.08% to $1.1787, following on from a 1.05% gain from the previous week. A 0.76% pullback on Friday limited the upside for the week.

For the European major indexes, it was a bullish week. The DAX30 rose by 2.94%, with the CAC40 and EuroStoxx600 gaining by 2.21% and by 2.03% respectively.

For the Loonie

It was a relatively quiet week on the economic calendar.

Economic data included June trade data and July employment and Ivey PMI numbers at the end of the week.

The stats were positive once more. While the trade deficit widened in June, employment jumped by 418.5k off the back of a 952.9k surge in May.

As a result, the unemployment rate slipped back from 12.3% to 10.9%.

July’s Ivey PMI also impressed, rising from 58.2 to 68.5.

The numbers were masked, however, by a bounce in the Greenback on Friday.

The Loonie rose by 0.21% to end the week at C$1.3384. A 0.58% slide on Friday reduced the gains for the week. In the week prior, the Loonie had risen by just 0.02%.

Elsewhere

It was another mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 7th August, the Aussie Dollar rose by 0.20% to $0.7157, while the Kiwi Dollar fell by 0.36% to $0.6605. A 1.24% slide on Friday, left the Kiwi in the red for the week.

For the Aussie Dollar

It was a relatively busy week for the Aussie Dollar.

Economic data included manufacturing sector numbers for July and June trade and retail sales figures.

The stats were skewed to the positive in the week. Manufacturing sector activity picked up in June, with the AIG Manufacturing Index rising from 51.5 to 53.5.

In July, Australia’s trade surplus widened from A$8.025bn to A$8.202bn, with retail sales rising by 2.7%.

The stats came ahead of the RBA’s monetary policy decision on Tuesday. In line with market expectations, the RBA held policy unchanged, while assuring the markets of no tightening anytime soon.

At the end of the week, the RBA’s Statement of Monetary Policy had a relatively muted impact on the Aussie Dollar. The RBA provided a number of scenarios that could play out with respect to the economic recovery. There was nothing too alarming, however.

For the Kiwi Dollar

It was another relatively quiet week on the economic data front.

Key stats included 2nd quarter employment figures and inflation expectations for the 3rd quarter.

The stats were skewed to the positive, with employment falling less than expected in the 2nd quarter. Inflationary pressures were also expected to build through the 3rd quarter, from 1.2% to 1.4%.

Trade data from China at the end of the week, coupled with positive labor market numbers from the U.S sank the Kiwi.

For the Japanese Yen

It was a busy week on the economic calendar.

Finalized 1st quarter GDP, July private sector PMIs, July inflation, and June household spending were in focus.

The stats were skewed to the positive for the Japanese Yen.

Finalized GDP numbers were in line with prelims, with the Japanese economy contracting by 0.6% in the 1st quarter.

July’s services PMI came in at 45.4, which was up from a prelim 45.2 and June 45.0.

More importantly, however, household spending jumped by 13% in June, reversing most of a 16.2% slump in May.

The Japanese Yen fell by 0.09% to ¥105.92, with a 0.35% fall on Friday delivering the weekly loss. In the week prior, the Yen had risen by 0.29%.

Out of China

It was a relatively busy week on the economic data front.

The market’s preferred Caixin private sector PMIs and trade figures for July were in focus.

Manufacturing sector activity continued to recover, with the Manufacturing PMI rising from 51.2 to 52.8.

A fall in the services PMI from 58.4 to 54.1 had a limited impact on the markets mid-week.

At the end of the week, however, July’s trade figures tested risk appetite.

While exports rose by 7.2%, which was well ahead of a forecasted 0.2% decline, imports fell by 1.4%. Economists had anticipated a 1.0% rise in imports.

The fall in imports raised concerns over demand, which continued to be lackluster from overseas.

In the week ending 7th August, the Chinese Yuan rose by 0.10% to CNY6.9680. In the week prior, the Yuan had risen by 0.62%.

The CSI300 eked out a 0.27% gain, while the Hang Seng fell by 0.26%. Heavy losses on Friday weighed on the pair.

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