The Weekly Wrap – Economic Data and Brexit Drove the Majors in the Week

It was the week where the Dollar took the hit, while Brexit progress provided support to the EUR and GBP.
Bob Mason
Businessman touching stock market graph on a virtual screen display.

The Stats

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.

Elsewhere

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.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US