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The Weekly Wrap – Brexit, COVID-19, and Capitol Hill Provided Direction

By:
Bob Mason
Updated: Dec 26, 2020, 03:29 UTC

A relatively quiet week on the economic data front left the Brexit, COVID-19 news, and updates from Capitol Hill in focus.

Money world

The Stats

It was a particularly quiet week on the economic calendar, in the week ending 25th December.

A total of 32 stats were monitored, following 92 stats from the week prior.

Of the 32 stats, 12 came in ahead of forecasts, with 19 economic indicators came up short of forecasts. 1 stat was in line with forecasts in the week.

Looking at the numbers, 10 of the stats reflected an upward trend from previous figures. Of the remaining 22 stats, 20 reflected a deterioration from the previous.

For the Greenback, it was back into the green to mark just a 2nd weekly gain in 6-weeks. The Dollar Spot Index rose by 0.23% to end the week at 90.223. In the week prior, the Dollar had fallen by 1.16% to 89.924.

Out of the U.S

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

Key stats included November personal spending figures, December consumer confidence, core durable goods orders, and weekly jobless claims figures.

Consumer confidence fell from 96.1 to 88.6. Concerns over the sharp increase in new COVID-19 cases weighed on consumer’s assessment of current conditions.

In the week ending 18th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

On the negative, however, was a fall in personal spending. Personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists had forecast a 0.2% decline.

Other stats included inflation, housing sector, and finalized 3rd quarter GDP and consumer sentiment numbers. These stats had a muted impact on the Dollar and the markets, however.

In the equity markets, the S&P500 fell by 0.17%, while the Dow and the NASDAQ ending the week with gains of 0.07% and 0.38% respectively.

Out of the UK

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

Finalized 3rd quarter GDP and business investment figures were in focus on Tuesday.

An upward revision to 3rd quarter GDP figures provided  early temporary relief for the Pound.

The economy expanded by 16%, reversing most of a 19.8% contraction from the 2nd quarter.

Business investment was also revised up from a prelim 8.8%. A 9.4% rise in the 3rd quarter was not enough to reverse a 26.5% slump from the 2nd quarter, however.

While the stats influenced in the early part of the week, Brexit and COVID-19 news remained the key drivers.

A new coronavirus strain led to the reintroduction of lockdown measures, amidst Brexit uncertainty, which weighed on the Pound early in the week.

A Brexit deal late in the week, however, supported a return to $1.35 levels to end the week in the green. The Pound had fallen to $1.33 levels before the recovery.

In the week, the Pound rose by 0.27% to $1.3560. In the week prior, the Pound had rallied by 2.27% to $1.3524.

The FTSE100 ended the week down by 0.41%, following a 0.27% loss from the previous week.

Out of the Eurozone

It was a quiet week on the economic data front.

Key stats included Flash Eurozone Consumer Confidence and German GfK Consumer Climate figures.

For the Eurozone, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From Germany, the GfK Consumer Climate Indicator fell from -6.7 to -7.3 in January. Economists had forecasted a larger decline to -8.8. A fall in income expectations weighed on the headline figure, with the latest spike in new COVID-19 cases and lockdown measures raising uncertainty.

On Wednesday, finalized 3rd quarter GDP figures from Spain had a muted impact on the majors.

Spain’s economy expanded by 16.4% in the 3rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

For the week, the EUR fell by 0.52% to $1.2193. In the week prior, the EUR had risen by 1.20% to $1.2257.

For the European major indexes, it was a mixed week. The CAC40 and DAX30 fell by 0.32% and by 0.10% respectively, while the EuroStoxx600 rose by 0.02%.

For the Loonie

It was a quieter week on the economic data front. Key stats included October GDP figures.

The economy expanded by 0.4% in October, following a 0.8% expansion in September. Economists had forecast 0.3% growth.

In spite of the better than expected numbers, softer growth pinned the Loonie back. Concerns over the continued rise in new COVID-19 cases and new strains added further pressure, with crude oil prices hitting reverse in the week.

In the week ending 11th December, the Loonie fell by 0.60% to C$1.2865. In the week prior, the Loonie had fallen by 0.15% to C$1.2788.

Elsewhere

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

In the week ending 25th December, the Aussie Dollar fell by 0.22% to $0.7605, with the Kiwi Dollar ending the week down by 0.27% to $0.7117.

For the Aussie Dollar

It was a quiet week on the economic calendar.

Key stats included Australia retail sales and private sector credit figures for November.

Retail sales jumped by 7% in November, according to prelim figures, coming in well ahead of a forecasted 0.6% decline. In October, retail sales had risen by 1.4%.

Private sector credit also saw a pickup in November, rising by 0.1%. Credit was down by 1.7% year-on-year.

The impact of the stats on the Aussie was relatively muted, however, as the markets grappled with news of the new coronavirus strains.

For the Kiwi Dollar

It was a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of COVID-19 news through the week, leading to the pullback.

For the Japanese Yen

It was a relatively busy week on the economic calendar. There were no economic data out until Friday, however. The stats had a muted impact on the Yen.

In November, retail sales rose by 0.7%, following an 11.90% jump in October, Economists had forecast a 1.7% rise.

The Japanese Yen fell by 0.13% to ¥103.43 against the U.S Dollar. In the week prior, the Yen had risen by 0.71% to ¥103.30.

Out of China

The PBoC was in action at the start of the week. In line with market expectations, however, the PBoC left loan prime rates unchanged.

A lack of stats and status quo on the monetary policy front left the Yuan in limbo for the week.

In the week ending 25th December, the Chinese Yuan fell by 0.03% to CNY6.5418. In the week prior, the Yuan had fallen by 0.10% to CNY6.5400.

The CSI300 rose by 0.84%, while the Hang Seng ended the week down by 0.42%.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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