The Weekly Wrap – Economic Data and Central Bank Chatter Influenced in the Week

The Stats

It was a quieter week on the economic calendar, in the week ending 28^th May.

A total of 41 stats were monitored, following 69 stats from the week prior.

Of the 41 stats, 25 came in ahead forecasts, with 14 economic indicators coming up short of forecasts. There were 2 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 16 stats, 13 reflected a deterioration from previous.

For the Greenback, economic data from the U.S and FOMC chatter continued to be the main area of focus. In the week ending 28^th May, the Dollar Spot Index rose by 0.02% to 90.031. In the previous week, the Dollar had fallen by 0.32% to 90.029.

Out of the U.S

Key stats through the week included consumer confidence, jobless claims and core durable goods orders.

The stats were mixed ahead of a busier Friday.

Consumer confidence weakened marginally in May, with 2^nd estimate GDP numbers for the 1^st quarter aligned with first estimates.

On the positive, however, was a slide in the weekly jobless claims from 444k to 406k.

A further 1.0% increase in core durable goods orders, following a 3.2% jump in March, was also positive.

At the end of the week, the focus shifted to inflation, personal spending, and consumer sentiment.

In May, personal spending rose by a more modest 0.5% after a 4.7% jump in April.

Inflationary pressures were on the rise, however, with the Core PCE Price Index rising by 0.7% in April. In the month of March, the Index had risen by 0.4%.

Year-on-year, the index jumped by 3.1% coming in ahead of a forecasted 2.9%. In April, the index had risen by 1.9%, year-on-year.

Finalized consumer sentiment figures affirmed a decline from April.

In May, the Michigan Consumer Sentiment Index fell from 88.3 to 82.9, which was up from a prelim 82.8.

On the monetary policy front, FOMC member chatter affirmed comments from the minutes of a willingness to consider a tapering to the asset purchasing program.

In the equity markets, the NASDAQ rose by 2.06%, with the Dow and the S&P500 seeing gains of 0.94% and 1.16% respectively.

Out of the UK

It was a particularly quiet week, with no major stats to provide the Pound with direction in the week.

A lack of stats left the Pound in the hands of the UK government’s ongoing reopening plans and the optimistic economic outlook.

In the week, the Pound rose by 0.27% to end the week at $1.4188. In the week prior, the Pound had risen by 0.38% to $1.4150.

The FTSE100 ended the week up by 0.06%, following a 0.36% decline from the previous week.

Out of the Eurozone

Early in the week, the German economy was in focus.

In the 1^st quarter, the German economy contracted by more than had been expected. Quarter-on-quarter, the economy contracted by 1.8%, revised down from a prelim 1.7%. Year-on-year, the economy contracted by 3.3%, which was revised down from a prelim 3.3% contraction.

Offsetting the effects of the downward revisions, however, were improved consumer and business sentiment.

The IFO Business Climate Index rose from 96.6 to 99.2, with the GfK Consumer Climate rising from -8.6 to -7.0.

At the end of the week, the French economy was in focus.

In the 1^st quarter, the French economy contracted by 0.1% quarter-on-quarter, revised down from a prelim 0.4% expansion. In the 4^th quarter, the economy had contracted by 1.5%.

Household spending also disappointed. In April 2021, consumer spending tumbled by 8.3%, month-on-month, versus a forecasted 0.4% increase. Consumer spending had fallen by 0.3% in March.

Inflationary pressures were on the rise, however. According to prelim figures, the annual rate of inflation picked up from 1.2% to 1.4% in May. Month-on-month, consumer prices increased by 0.3%, following a 0.1% rise in April.

For the week, the EUR rose by 0.08% to $1.2192. In the week prior, the EUR had risen by 0.34% to $1.2182.

The DAX30 rose by 0.53%, with CAC40 and the EuroStoxx600 ending the week up by 1.53% and by 1.02% respectively.

For the Loonie

It was a particularly quiet week. There were no major stats to provide the Loonie with direction in the week.

A lack of stats left the Loonie in the hands of crude oil inventory numbers and market risk sentiment.

Rising crude oil prices delivered support to prevent a reversal of the previous week’s gain.

In the week ending 28^th May, the Loonie slipped by 0.08% to C$1.2076. In the week prior, the Loonie had risen by 0.31% to C$1.2066.

Elsewhere

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

In the week ending 28^th May, the Aussie Dollar fell by 0.26% to $0.7712, while the Kiwi Dollar ended the week up by 1.06% to $0.7250.

For the Aussie Dollar

It was a quiet week.

Construction work done and private new CAPEX figures for the 1^st quarter were in focus.

The stats were skewed to the positive but were not good enough to prevent a Friday fall into the red.

Construction work done rose by 2.4%, reversing a 0.9% decline from the 4^th quarter of last year.

Private sector credit jumped by 6.3% following a 3.0% rise in the 4^th quarter of last year.

For the Kiwi Dollar

It was a busy week.

At the start of the week, 1^st quarter retail sales figures impressed. Quarter-on-quarter, retail sales rose by 2.5%, with core retail sales up by 3.2%. In the 4^th quarter, retail sales and core retail sales had fallen by 2.7% and by 2.9% respectively.

Mid-week, trade data delivered mixed results, however.

Month-on-month, the trade surplus widened from NZ$39m to NZ$388m. Year-on-year, however, the surplus narrowed from NZ$1,700m to NZ$730m.

With the RBNZ in action on Wednesday, the trade data had a muted impact on the Kiwi.

A more hawkish than expected outlook on monetary policy delivered the upside for the Kiwi.

The RBNZ rate statement revealed that the cash rate could be on the rise as early as the final quarter of 2022.

For the Japanese Yen

It was a quieter week.

The markets had to wait until Friday for inflation figures.

In May, Tokyo’s core annual rate of inflation held steady at -0.2%, which was in line with forecasts.

Month-on-month, consumer prices ex food and energy remained unchanged after a 0.4% fall in April.

The stats had a muted impact on the Japanese Yen, however, which was under pressure in the week.

The Japanese Yen fell by 0.82% to ¥109.85 against the U.S Dollar. In the week prior, the Yen had risen by 0.36% to ¥108.96.

Out of China

It was a particularly quiet week on the data front.

There were no major stats to influence market risk appetite in the week.

In the week ending 28^th May, the Chinese Yuan rose by 1.02% to CNY6.3685. In the week prior, the Yuan had fallen by 0.05% to CNY6.4340.

The CSI300 rallied by 3.64%, with the Hang Seng ending the week up by 2.34%.