The Weekly Wrap – Economic Data and Brexit Drove the Majors in the WeekIt was the week where the Dollar took the hit, while Brexit progress provided support to the EUR and GBP.
It was a busier week on the economic calendar in the week ending 18th October.
A total of 58 stats were monitored throughout the week, following 44 stats from the week prior.
Of the 58 stats, 22 came in ahead forecasts, with 26 economic indicators coming up short of forecast. 10 stats were in line with forecasts in the week.
Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 39, 35 stats reflected a deterioration from previous.
A jump in the EUR and the GBP contributed to the Dollar’s demise in the week.
The U.S Dollar Index (“DXY”) fell by 1.04% to end the week at $97.282.
Out of the U.S
It was a relatively busy week on the economic data front. September retail sales figures on Wednesday and the Philly FED Manufacturing Index numbers on Thursday had the greatest influence.
On Wednesday, retail sales came in soft, with core retail sales falling by 0.1%, month-on-month. Economists had forecast a 0.2% rise. Retail sales also weighed, with sales sliding by 0.3%, which was worse than a forecasted rise of 0.3%.
The Philly FED Manufacturing Index fell from 12.0 to 5.6 in October, falling beyond a forecasted decline to 7.3.
On the positive, however, was a rebound in the Philly employment sub-index, which rose from 15.8 to 32.9.
Of less influence in the week were weak industrial production and housing start numbers.
Some support came from better than expected building permit figures and a pickup in manufacturing sector activity in NY State.
Outside of the stats, geopolitics remained in focus. Progress on Brexit and sentiment towards the U.S – China trade war influenced risk sentiment in the week.
Boris Johnson managed to push through a revised agreement that awaits a Parliamentary vote later today.
News of a draft U.S – China trade agreement being prepared for Trump and Xi was also positive.
In the equity markets, a Friday sell-off left the Dow in the red for the week. The Dow fell by 0.17%, while the S&P500 and NASDAQ rose by 0.54% and by 0.40% respectively. Gains for the week came in spite of the pair also seeing red on Friday.
Out of the UK
It was another busy week on the economic calendar.
Key stats included employment and wage growth figures on Tuesday and September retail sales figures on Thursday.
The UK unemployment rose from 3.8% to 3.9% in August, with claimant counts also on the rise. Also negative was a slide in employment numbers and weaker wage growth.
Consumer spending in September were also Sterling negative. Core retail sales disappointed, falling by 0.2%, month-on-month.
Inflation figures on Wednesday had a muted impact on the Pound, with the annual rate of inflation holding steady at 1.7%.
While the stats were of influence, the upside ultimately came from progress on Brexit.
The Pound reached $1.29 levels on Thursday following news of the EU approving Johnson’s latest version of the Brexit agreement.
In spite of uncertainty over whether Parliament would ratify the agreement, there were more gains on Friday.
For Johnson and the Brexiteers, the Lib Dems, Labour, and the DUP remained a stumbling block…
The Pound ended the week up by 2.49% to $1.2984.
For the FTSE100, a stronger Pound coupled with concerns over the global economic outlook pressured the 100. The FTSE100 fell by 1.33%, reversing a 1.28% gain from the previous week.
Out of the Eurozone
It was a relatively quiet week on the economic data front.
Key stats included the Eurozone’s industrial production figures from Monday and trade and inflation figures from Wednesday.
Industrial production rebounded in August, providing support on Monday. On Thursday, however, the Eurozone’s trade balance figures and inflation numbers were skewed to the negative.
The trade surplus narrowed from €24.8bn to €14.7bn in August. On the inflation front, the Eurozone’s annual rate of inflation softened from 1.0% to 0.8%.
On Tuesday, the ZEW’s economic sentiment figures for Germany and the Eurozone also influenced.
While better than forecasted, sentiment in both Germany and the Eurozone deteriorated further in October.
Consumer concerns over Brexit and the ongoing U.S – China trade war weighed on consumer sentiment.
For the week, the EUR rose by 1.13% to $1.1167.
For the European major indexes, the DAX30 and the EuroStoxx600 rose by 0.97% and by 0.06% respectively. The CAC40 bucked the trend with a 0.52% loss.
It was another positive week for the Aussie and Kiwi Dollars.
The Aussie Dollar rose by 0.91% to $0.6856, with the Kiwi Dollar up by 0.71% to $0.6382.
For the Aussie Dollar
It was a relatively quiet week for the Aussie Dollar.
Economic data was limited to September employment figures and the NAB Business Confidence numbers for the 3rd quarter.
It was a mixed bag for the Aussie Dollar, but ultimately positive. A fall in the unemployment rate from 5.3% to 5.2% provided support, with full employment change figures impressing.
In September, full employment rose by 26.2k, reversing a 15.5k fall in August.
The upside for the Aussie Dollar came in spite of a slide in business confidence in the 3rd quarter.
On the monetary policy front, the RBA released its meeting minutes on Tuesday, which had limited impact.
From elsewhere, economic data out of China provided support on Friday. While China’s economy slowed in the 3rd quarter, it could have been worse. A jump in industrial production in September was AUD positive on the day.
For the Kiwi Dollar
The stats were on the lighter side but not without influence.
3rd quarter inflation figures provided support on Wednesday. While the annual rate of inflation eased from 1.7% to 1.5% in the 3rd quarter, economists had forecasted an easing to 1.4%.
Quarter-on-quarter, inflationary pressures picked up, with consumer prices rising by 0.7%. In the 2nd quarter, consumer prices had risen by 0.6%.
For the Loonie
It was a relatively busy week for the Loonie.
Key stats included September inflation figures on Wednesday and manufacturing sales numbers on Thursday.
While manufacturing sales bounced back in August, rising by 0.8%, inflation was mixed.
The core annual rate of inflation held steady at 1.9% providing support. consumer prices, however, fell by 0.4% in September.
The Loonie ended the week up by 0.58% to C$1.3127 against the Greenback.
For the Japanese Yen
It was a quiet week on the data front. Stats were limited to finalized August industrial production figures on Tuesday and September inflation numbers on Friday.
Month-on-month, industrial production fell by 1.2%, which was in line with prelim.
Inflationary pressures also eased, with the annual rate of core inflation weakening from 0.5% to 0.3%.
With the stats on the lighter side, geopolitical risk remained the key driver.
The Japanese Yen fell by 0.15% to ¥108.45, against the U.S Dollar.
Out of China
It was a big week on the economic data front.
Key stats included trade data on Monday and 3rd quarter GDP numbers and industrial production figures released on Friday.
While China’s U.S Dollar trade surplus widened in September, both imports and exports slid. The negative numbers pointed to weakening demand both domestically and globally.
Stats on Friday showed that the Chinese economy slowed from 6.2% to 6.0% in the 3rd quarter. Quarter-on-quarter, the economy grew by 1.5%, which was also softer than a 2nd quarter 1.6%.
On the positive, however, was a jump in industrial production in September. Production rose by 5.8%, year-on-year, up from 4.4% in August.
While the U.S and China were making progress on trade and the economy avoided a meltdown, the equity markets struggled at the end of the week.
The Yuan rose by 0.11% to CNY7.0817 against the Greenback.