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Bob Mason
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The Stats

It was a quieter week on the economic calendar, in the week ending 25th June.

A total of 49 stats were monitored, which was down from 61 stats in the week prior.

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Of the 49 stats, 24 came in ahead forecasts, with 22 economic indicators coming up short of forecasts. There were 3 stats that were in line with forecasts in the week.

Looking at the numbers, 25 of the stats reflected an upward trend from previous figures. Of the remaining 24 stats, 21 reflected a deterioration from previous.

For the Greenback, economic data and FED Chair Powell testimony weighed. In the week ending 25th June, the Dollar Spot Index slipped by 0.41% to 91.851. In the previous week, the Dollar had rallied by 2.32% to 92.225.

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Out of the U.S

It was quiet start to the week.

The markets had to wait until Wednesday for June’s prelim private sector PMI numbers.

It was a mixed bag for the markets. While manufacturing sector activity picked up, the pace of service sector growth slowed in June.

The services PMI fell from 70.4 to 64.8, while the manufacturing PMI rose from 62.1 to 62.6.

On Thursday, core durable goods and jobless claims figures disappointed. In the week ending 18th June, initial jobless claims saw a modest decline from 418k to 411k.

Core durable goods orders failed to impress, rising by just 0.3%. Economists had forecast a 0.8% rise off the back of a 1.7% jump in April.

At the end of the week, the focus then shifted to inflation and personal spending figures.

In May, personal spending stalled, falling short of a forecasted 0.4% rise. In April, spending had risen by 0.9%.

Inflationary pressures were on the rise, however, aligned with market expectations. The FED’s preferred Core PCE Price Index rose by 3.4% year-on-year, following a 3.1% increase in April. This was in line with forecasts.

Other stats included finalized consumer sentiment and expectation figures that had a muted impact on the markets.

In the equity markets, the Dow rallied by 3.44%, with the NASDAQ and the S&P500 rising by 2.35% and by 2.74% respectively.

Out of the UK

It was a relatively quiet week, with industrial trend orders and prelim private sector PMIs in focus.

In June, the CBI Industrial Trend Orders increased from 17 to 19.

It was the only positive stat of the week, however, with private sector activity seeing slower growth in June.

The Manufacturing PMI fell from 65.6 to 64.2, with the Services PMI declining from 62.9 to 61.7.

While the stats were negative for the Pound, the BoE monetary policy decision was the main event of the week.

On Thursday, the BoE left policy unchanged, which was in line with market expectations.  The minutes pointed to a meaningful review in August, when the MPC is furnished with the latest projections. A unanimous vote in favor of a hold on interest rates weighed on the Pound on the day, however.

Adding to the downside for the Pound was a continued rise in new cases of the Delta strain of the coronavirus.

In the week, the Pound rose by 0.50% to end the week at $1.3879. In the week prior, the Pound had fallen by 2.45% to $1.3810.

The FTSE100 ended the week up by 1.69%, reversing a 1.63% fall from the previous week.

Out of the Eurozone

It was a busy week.

Consumer confidence figures on Tuesday improved marginally in June, providing limited EUR support.

On Wednesday, private sector PMIs for June were positive, however.

Germany’s manufacturing PMI rose from 64.4 to 64.9, with the services PMI increasing from 52.8 to 58.1.

France’s services PMI was also on the rise, increasing from 56.6 to 57.4. Manufacturing sector growth slowed, however, with the PMI falling from 59.4 to 58.6.

As a result, the Eurozone’s manufacturing PMI held steady at 63.1, while the services PMI increased from 55.2 to 58.0.

The pickup in service sector activity drove the composite PMI to a 180-month high 59.2.

In the second half of the week, business and consumer sentiment figures for Germany were in focus.

In June, the Ifo Business Climate Index rose from 99.2 to 101.8 in June. Economists had forecast an increase to 100.6.

The Business Expectations sub-index increased from 102.9 to 104.0, with the Current Assessment sub-index climbing from 95.7 to 99.6. Economists had forecasted increases to 103.9 and to 97.8 respectively.

For July, the GfK consumer climate indicator increased from -6.9 to -0.3, coming in ahead of a forecasted -4.0. The pickup in consumer confidence supported the ECB’s outlook on consumer spending.

The ECB

On the monetary policy front, ECB President Lagarde delivered an optimistic outlook on the economy early in the week.

The ECB’s Economic Bulletin also drew attention on Thursday.

Salient points from the Bulletin included:

  • The latest data signal a bounce-back in services activity and ongoing dynamism in manufacturing production.
  • Economic activity is expected to accelerate in the 2nd half of this year, as further containment measures are lifted.
  • A pickup in consumer spending, strong global demand, and accommodative fiscal and monetary policies will lend crucial support to the recovery.
  • Uncertainties remain, however, as the near-term economic outlook continues to depend on the course of the pandemic and on how the economy responds after reopening.
  • Inflation has picked up as a result of transitory factor and an increase in energy prices. It is expected to rise further through the 2nd half of the year before declining as temporary factors fade out.
  • Headline inflation is expected to remain below the Governing Council’s aim over the projection horizon.

For the week, the EUR rose by 0.61% to $1.1935. In the week prior, the EUR had fallen by 2.50% to $1.1863.

The EuroStoxx600 ended the week up by 1.23%, with the CAC40 and the DAX30 gaining 0.82% and by 1.04% respectively.

For the Loonie

It was another quiet week. Retail sales figures for April disappointed on Wednesday. Sales slid by 5.7%, reversing a 3.6% jump from March. Core retail sales tumbled by 7.2%, reversing a 4.3% rise from March.

In the week ending 25th June, the Loonie rose by 1.39% to C$1.2292. In the week prior, the Loonie had tumbled by 3.15% to C$1.2465.

Elsewhere

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

In the week ending 25th June, the Aussie Dollar rose by 1.48% to $0.7590, with the Kiwi Dollar gaining 1.98% to $0.7073.

For the Aussie Dollar

It was a quiet week. Prelim retail sales figures for May were the key stats of the week.

The numbers were Aussie Dollar negative, with retail sales rising by just 0.1% in May. While negative, the impact was limited. May’s disappointing figure was attributed to a reintroduction of COVID-19 restrictions in the State of Victoria.

For the Kiwi Dollar

It was a relatively quiet week.

Consumer sentiment and trade data were in focus.

In the 2nd quarter, consumer sentiment improved, with the Westpac Consumer Sentiment Index rising from 105.2 to 107.1.

While the headline figure was positive, the sub-indexes for a good time to buy and 5-year economic outlook fell in the quarter.

At the end of the week, trade data provided the Kiwi Dollar with support.

In May, New Zealand’s trade surplus widened from NZ$414m to NZ$469m.

Year-on-year, the trade balance fell from a NZ$760m surplus to a NZ$62m deficit. This was the first annual deficit since the year ended June 2020.

While dairy goods exports were on the rise, car imports by value hit an all-time high as the COVID-19 pandemic recovery continued.

For the Japanese Yen

It was a quieter week.

Mid-week, prelim private sector PMIs for June delivered mixed results ahead of inflation figures on Friday.

Japan’s manufacturing PMI fell from 53.0 to 51.5, while the services PMI rose from 46.5 to 47.2.

The numbers were far from compelling, suggesting status quo on the monetary policy front for the foreseeable future.

At the end of the week, inflation figures were Yen positive. Tokyo core consumer prices held steady in June, year-on-year. In May, core consumer prices had fallen by 0.2% year-on-year.

The Japanese Yen fell by 0.49% to ¥110.750 against the U.S Dollar. In the week prior, the Yen had fallen by 0.63% to ¥110.210.

Out of China

There were no material stats to draw attention in the week.

At the start of the week, the PBoC left loan prime rates unchanged, which was in line with market expectations

In the week ending 25th June, the Chinese Yuan fell by 0.05% to CNY6.4562. In the week prior, the Yuan had fallen by 0.90% to CNY6.4531.

The CSI300 and the Hang Seng ended the week up by 2.69% and by 1.69% respectively.

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