The Weekly Wrap – Data, COVID-19, Brexit, and U.S Politics Drove the Majors

The Stats

It was a busier week on the economic calendar, in the week ending 2^nd October.

A total of 74 stats were monitored, following 32 stats from the week prior.

Of the 74 stats, 38 came in ahead forecasts, with 26 economic indicators came up short of forecasts. 10 stats were in line with forecasts in the week.

Looking at the numbers, 42 of the stats also reflected an upward trend from previous figures. Of the remaining 32 stats, 28 reflected a deterioration from previous.

For the Greenback, it was back into the red, with the Dollar Spot Index falling by 0.84% to 93.844. In the week ending 25^th September, the Dollar Spot Index had rallied by 1.85% to 94.624.

Market risk appetite returned, in spite of a Presidential Debate blip mid-week, leading to the Dollar’s demise.

Even news of U.S President Trump being tested positive failed to reverse losses for the Dollar at the end of the week.

Progress towards a COVID-19 relief Bill on Capitol Hill contributed to the Dollar’s weakness.

Out of the U.S

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

Key stats included September consumer confidence, ADP nonfarm, Manufacturing PMIs, weekly jobless claims, and labor market data.

Factory orders for August were also in focus at the end of the week.

Finalized 4^th GDP and consumer sentiment figures, August inflation, trade, and personal spending data had a muted impact in the week.

The stats were skewed to the positive. Consumer confidence and ADP numbers impressed, with the weekly jobless claims seeing a decline in late September.

With personal spending on the rise, marginally softer growth in the manufacturing sector was the only negative ahead of Friday’s stats. The ISM Manufacturing PMI slipped from 56.0 to 55.4. While the headline figure was negative, the employment sub-index jumped from 46.4 to 49.6.

At the end of the week, the U.S labor market and factory order figures failed to support riskier assets.

Non-farm payrolls rose by 661K, following a 1,489k surge in August. The unemployment rate fell from 8.4% to 7.9%. Economists had expected an 850k rise in nonfarm payrolls in September.

Wage growth and the participation rate also suggested that the labor market recovery was spluttering.

Factory orders were also weaker than forecasts. A 0.7% rise in August came up short of a forecasted 1% increase. In July, orders had jumped by 6.5%.

In the equity markets, the NASDAQ rose by 1.48%, with the Dow and S&P500 gaining 1.87% and 1.52% respectively.

Out of the UK

It was a quieter week on the economic calendar.

Key stats included finalized 2^nd quarter GDP and finalized September Manufacturing PMI numbers.

The stats were mixed in the week. Upward revisions to 2^nd quarter GDP figures were Pound positive, while a downward revision to the Manufacturing PMI was negative.

In the 2^nd quarter, the economy contracted by 19.8%, revised up from a 2^nd estimate 20.4% contraction.

The manufacturing PMI was revised down from 54.3 to 54.1. In August, the PMI had stood at 55.2.

On the Brexit front, the Pound found support, however, with Brexit updates talking of possible compromise. High-level talks today, between Boris Johnson and Ursula von der Leyen will be key, however.

In the week, the Pound rose by 1.48% to $1.2935, reversing a 1.32% slide from the previous week.

The FTSE100 ended the week up by 1.02%, partially reversing a 2.74% slide from the previous week.

Out of the Eurozone

It was another busy week on the economic data front.

Key stats included prelim inflation figures, retail sales, unemployment, and manufacturing PMI numbers.

It was a mixed bag on the economic data front. Retail sales figures from France and Germany and German unemployment figures provided EUR support.

Manufacturing PMIs were also EUR positive, with Germany’s PMI hitting a 26-month high. For the Eurozone, a further pickup in activity and new orders drove the PMIs upwards.

Prelim inflation figures for September reflected a further pickup in deflationary pressures, however.

The Eurozone’s annual rate of core inflation softened from 0.4% to 0.2%. More significantly, however, consumer prices fell by 0.3%, year-on-year, following a 0.2% decline in August.

Month-on-month, consumer prices rose by 0.1%, partially reversing a 0.4% decline in August.

For the week, the EUR rose by 0.73% to $1.1716. In the week prior, the EUR had fallen by 1.77% to $1.1631.

For the European major indexes, it was a bullish week. The CAC40 and EuroStoxx600 rose by 2.01% and by 2.02% respectively, with the DAX30 gaining by 1.76%.

For the Loonie

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

Key stats included RMPI and GDP numbers.

The stats were mixed in the week.

In August, the RMPI rose by 3.2%, reversing a 3.0% slide from July. Economic activity grew at a slower pace in July, however. Following a 6.5% jump in June, the economy grew by a more modest 3% in July.

The Loonie rose by 0.58% to end the week at C$1.3308. In the week prior, the Loonie had fallen by 1.38%.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, which recovered some of the previous week’s losses.

In the week ending 2^nd October, the Aussie Dollar rose by 1.85% to $0.7161. The Kiwi Dollar wasn’t far behind, ending the week up by 1.45% to $0.6641.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats included private sector credit, manufacturing, and retail sales figures.

The stats were skewed to the negative for the Aussie Dollar. Private sector credit was flat in August, with retail sales sliding by 4% to reverse a 3.2% rise in July.

The AIG Manufacturing Index fell from 49.3 to 46.7, with the decline attributed to the containment measures in Victoria.

For the Kiwi Dollar

It was a quiet week on the economic calendar.

Key stats included business confidence figures for September.

The ANZ Business Confidence Index rose from -41.8 to -28.5, which was down marginally from a prelim -26.0. Investment and employment intentions, along with optimism over the profit outlook supported the uptick in the month.

For the Japanese Yen

It was a busy week on the economic calendar.

Inflation, industrial production, retail sales, and 3^rd quarter Tankan survey data were in focus.

The stats were skewed to the positive in the week.

Deflationary pressures eased in September, with core consumer prices falling by 0.2% in September, year-on-year. In August, consumer prices had fallen by 0.3%.

Industrial production rose by 1.7%, following an 8.7% jump in July, while retail sales fell by 1.9%. In July, sales had fallen by 2.9%.

Looking at the 3^rd quarter Tankan numbers:

• All Big Industry CAPEX Index increased by 1.4%, following a 3.2% rise in the 2^nd Economist had forecast a 1.3% gain.
• Big Manufacturing Outlook Index rose from -27 to -17, which was in line with forecasts.
• The Large Manufactures Index increased from -34 to -27. Economists had forecast a rise to -23.
• Large Non-Manufacturers Index increased from -17 to -12 in the 3^rd Economists had forecast an increase to -9.

The Japanese Yen rose by 0.27% to ¥105.29 against the U.S Dollar. In the week prior, the Yen had fallen by 0.97%. While the stats influenced, the U.S presidential debate and news of Trump testing positive for COVID-19 supported the upside.

Out of China

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

Key stats included September’s private sector PMIs, which were positive for market risk sentiment.

The NBS manufacturing PMI rose from 51.0 to 51.5, with the non-manufacturing PMI increasing from 55.2 to 55.9.

In September, the market’s preferred Caixin manufacturing PMI slipped from 53.1 to 53.0. In spite of the fall, new orders expanded at the most marked pace since January 2011. Export sales supported the pickup in new orders.

In the week ending 2^nd October, the Chinese Yuan rose by 0.48% to CNY6.7910. In the week prior, the Yuan had fallen by 0.81%.

The CSI300 rose by 0.38%, with the Hang Seng gaining 0.96% in a shorted week.