The Weekly Wrap – Another Week for the Greenback ahead of NFP Numbers for September

The Stats

It was a busier week on the economic calendar, in the week ending 1^st October.

A total of 65 stats were monitored, which was up from 39 stats in the week prior.

Of the 65 stats, 37 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. There were 5 stats that 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 30 stats, 25 reflected a deterioration from previous.

For the Greenback, monetary policy divergence contributed to another weekly gain. In the week ending 1^st October, the Dollar Spot Index rose by 0.76% to 94.035. In the previous week, the Dollar had risen by 0.09% to 93.281.

Out of the U.S

Early in the week, durable goods orders and consumer confidence were in focus, with the stats market negative.

While durable goods orders jumped by 1.8% in August, core durable goods rose by just 0.2%. Economists had forecast a 0.5% increase in core durable goods orders.

Consumer confidence also waned, with the CB Consumer Confidence Index falling from 115.2 to 109.3.

On Thursday, the stats were also skewed to the negative. In the week ending 24^th September, initial jobless claims increased from 351k to 362k, with the Chicago PMI falling from 66.8 to 64.7.

The only positive was an upward revision to GDP numbers. In the 2^nd quarter, the U.S economy expanded by 6.7%, which was up from a 2^nd estimate 6.6%.

A busy end to the week saw manufacturing, inflation, and personal spending in focus.

The stats were skewed to the positive.

In September, the ISM Manufacturing PMI rose from 59.9 to 61.1, with personal spending up 0.8% in August. Personal spending had fallen by 0.1% in July.

Month-on-month, the Core PCE Price Index rose by 0.3% following a 0.3% increase in July. Year-on-year, the index increased by 3.6% after having been up by 3.6% in July.

Out of the UK

It was a quieter week, with 2^nd quarter GDP and finalized manufacturing PMI figures in focus.

In the 2^nd quarter, the UK economy expanded by 5.5%, which was up from a prelim 4.8%. The UK economy had contracted by 1.6% in the 1^st quarter. Year-on-year, the economy grew by 23.6%, up from a prelim 22.2%.

In September, the Manufacturing PMI increased from 56.3 to 57.1. This was up from a prelim 56.3.

The numbers were not good enough to prevent a slump in the Pound, however. A fuel crisis and negative central bank chatter sank the Pound in the week.

In the week, the Pound slid by 0.97% to end the week at $1.3546. In the week prior, the Pound had fallen by 0.45% to $1.3679.

The FTSE100 ended the week down by 0.35%, partially reversing a 1.26% gain from the previous week.

Out of the Eurozone

It was a particularly busy week.

Early in the week, Germany’s GfK Consumer Climate Index rose from -1.4 to +0.3, which was market positive.

Germany’s unemployment rate held steady at 5.5% after a smaller than expected fall in unemployment in September, however.

French and German consumer spending were upbeat, with increases of 1.0% and 1.1% respectively in August.

Manufacturing sector PMIs were skewed to the negative, however.

Spain’s Manufacturing PMI fell from 59.5 to 58.1, with Italy’s down from 60.9 to 59.7 in September.

France and Germany’s PMIs were revised down from prelims, leaving the Eurozone PMI down from 58.7 to 58.6.

Inflation figures pointed to a further pickup in inflationary pressure at the end of the 3^rd quarter.

In September, the Eurozone’s annual rate of inflation accelerated from 3.0% to 3.4%, raising further questions over the ECB’s transitory view.

For the week, the EUR slid by 1.06% to $1.1596. In the week prior, the EUR had fallen by 0.04% to $1.1720.

The CAC40 fell by 1.82%, with the DAX30 and the EuroStoxx600 sliding by 2.42% and 2.35% respectively.

For the Loonie

It was a quiet week, with RMPI and GDP numbers in focus.

The stats were Loonie negative, with the Canadian economy contracting by 0.1% in July. In June, the economy had expanded by 0.6%. RMPI numbers also failed to impress, with the RMPI falling by 2.4% in August. In July, the RMPI had risen by 2.2%.

While the stats were market negative, rising crude oil prices delivered support in the week.

In the week ending 1^st October, the Loonie rose by 0.03% to C$1.2648. In the week prior, the Loonie had risen by 0.88% to C$1.2752.

Elsewhere

It was yet another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slipped by 0.06% to $0.7258, with the Kiwi Dollar ending the week down by 0.96% to $0.6948.

For the Aussie Dollar

Retail sales fell by 1.7% in August, following on from a 2.7% slide in July as a result of lockdown measures.

Private sector credit saw a more modest increase in August, rising by 0.6%. In July, private sector credit had risen by 0.7%.

Also negative was a fall in the AIG Manufacturing Index from 51.6 to 51.2.

For the Kiwi Dollar

Business confidence was in focus. In September, the ANZ Business Confidence Index climbed from -14.2 to -7.2.

Building consents, which increased by 3.8% in August, had a muted impact on the Kiwi, however.

In spite of upbeat numbers, the Kiwi Dollar struggled amidst rising U.S Treasury yields.

For the Japanese Yen

It was a relatively busy week, with the numbers mixed.

For August, industrial production and retail sales figures disappointed. Year-on-year, retail sales fell by 3.2% after having been up 2.4% in July. Industrial production slid by 3.2%, month-on-month, following a 1.5% decline in July.

Tankan survey-based figures for the 3^rd quarter were skewed to the positive, however.

The Tankan Large Manufacturers Index rose from 14 to 18, with the Large Non-Manufacturing Index up from 1 to 2.

The Japanese Yen fell by 0.29% to ¥111.050 against the U.S Dollar. In the week prior, the Yen had fallen by 0.73% to ¥110.73.

Out of China

Private sector PMIs for September were in focus.

The NBS Manufacturing PMI fell from 50.1 to 49.6, while the Non-Manufacturing PMI jumped from 47.5 to 53.2.

The market’s favored Caixin Manufacturing PMI rose from 49.2 to 50.0 in September.

In the week ending 1^st October, the Chinese Yuan increased by 0.33% to CNY6.4448. In the week prior, the Yuan had ended the week flat at CNY6.4662.

The CSI300 and the Hang Seng ended the week up by 0.35% and by 1.59% respectively.