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Bob Mason
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The Stats

It was a busy week on the economic calendar, in the week ending 7th May.

A total of 57 stats were monitored, following 61 stats from the week prior.

Of the 57 stats, 33 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 30 of the stats reflected an upward trend from previous figures. Of the remaining 27 stats, 26 reflected a deterioration from previous.

For the Greenback, it was back in the red. In the week ending 7th May, the Dollar Spot Index slid by 1.15 % to 90.233. In the previous week, the Dollar had risen by 0.48% to 91.207.

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Out of the U.S

It was a mixed set of numbers from the U.S.

Both the manufacturing and services sector saw slower growth in April, according to the market’s preferred ISM surveys.

Ahead of Friday’s nonfarm payroll figures, however, labor market numbers had been upbeat.

In April, nonfarm payrolls increased by 742k in April according to the ADP. Payrolls had risen by 565k in March.

The weekly jobless claims figures were also upbeat. In the week ending 30th April, initial jobless claims fell from 590k to 498k.

At the end of the week, however, it was nonfarm payrolls and unemployment figures that were key.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

In the equity markets, the NASDAQ fell by 1.51%, while the Dow and the S&P500 saw gains of 2.67% and 1.23% respectively.

Out of the UK

It was a relatively busy week.

Finalized private sector PMIs were in focus in the week. At the end of the week, April’s construction PMI was in focus but had a muted impact on the Pound.

The stats were skewed to the positive in the week.

In April, the manufacturing PMI increased from 58.9 to 60.9, coming in ahead of a prelim 60.7.

The services PMI increased from 56.3 to 61.0, coming in ahead of a prelim 60.1.

As a result of the upward revisions, the composite PMI rose from 56.4 to 60.7, which was up from a prelim 60.0.

While the stats were positive, the BoE monetary policy decision on Thursday was the main event, however.

On Thursday, the BoE left rates and the QE total unchanged, which was in line with market expectations.

There was no dissent, with all in favor of standing pat on policy.

While standing pat, the BoE announced slower bond purchases in response to a sharp upward revision to growth forecasts for 2021.

The BoE revised up growth for 2021 from 5.0% to 7.25%.

In the week, the Pound rose by 1.17% to end the week at $1.1.3984. In the week prior, the Pound had fallen by 0.39% to $1.3822.

The FTSE100 ended the week up by 2.29%, following a 0.45% gain from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Through the 1st half of the week, private sector PMI figures for April were in focus.

Manufacturing sector activity continued to lead the way. The Eurozone’s Manufacturing PMI rose from 62.5 to 62.9. Service sector activity across the Eurozone also returned to growth, with the Eurozone services PMI rising from 49.6 to 50.5.

Other stats in the week included German retail sales, industrial production, and trade data.

These stats were also positive EUR and the European majors. While Germany’s trade surplus narrowed, both retail sales and industrial production were on the rise in March.

Even the narrowing of the trade surplus was positive. A larger jump in imports over exports pointed to increased demand.

From the ECB, the Economic Bulletin was also in focus. While talking of uncertainty near-term, there was optimism over the medium term, which was EUR positive.

For the week, the EUR rose by 1.21% to $1.2166. In the week prior, the EUR had fallen by 0.64% to $1.2020.

The CAC40 rose by 1.85%, with the DAX30 and EuroStoxx600 ended the week up by 1.74% and by 1.69% respectively.

For the Loonie

It was a busier week.

In the 1st half of the week, building permits and trade data were in focus.

Canada’s trade balance fell from C$1.04bn surplus to a C$1.14bn deficit in March.

At the end of the week, employment figures and the Ivey PMI for April also provided direction.

In April, employment fell by 207.1k, partially reversing a 303.1k jump in March. As a result, the unemployment rate increased from 7.5% to 8.1%.

The Ivey PMI fell from 72.9 to 60.6 in the month of April. Economists had forecast a decline to 60.5.

Despite the stats, the markets were in a forgiving mood followed the BoC’s more hawkish outlook.

In the week ending 7th May, the Loonie rose by 1.26% to C$1.2100. In the week prior, the Loonie had jumped by 1.51% to C$1.2288.

Elsewhere

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

In the week ending 7th May, the Aussie Dollar rallied by 1.66% to $0.7844, with the Kiwi Dollar ending the week up by 1.62% to $0.7278.

For the Aussie Dollar

It was a relatively quiet week.

In the 1st half of the week, manufacturing and trade data were in focus. It was a mixed set of numbers.

While manufacturing sector activity picked up, a fall in exports led to a marked narrowing in the trade surplus in March. The surplus narrowed from A$7.529bn to A$5.574bn. Economists had forecast a widening to A$8.000bn.

In the 2nd half of the week, building approvals were in focus, which had a muted impact on the Aussie Dollar.

On the monetary policy front, the RBA was also in action in the week.

The RBA left the cash rate unchanged at 0.1% on Tuesday, which was in line with expectations. There was a more hawkish tone within the RBA Rate Statement, however.

Growth forecasts for 2021 were revised up from 3.5% in February to 4.75% in the latest statement. The RBA also projected that unemployment will fall to a 2008 low 4.5% next year.

In spite of the revisions, the RBA stood by its policy outlook, with the cash rate to remain unchanged until 2024. The RBA did state, however, that it would decide whether to extend its government bond purchases at the July meet.

At the end of the week, the RBA’s Statement of Monetary Policy was also in focus on Friday. Upward revisions to economic growth and unemployment forecasts for 2021 were key takeaways from the statement.

For the Kiwi Dollar

It was a quiet week.

Employment figures for the 1st quarter were in focus along with March building consents and business confidence.

In the 1st quarter, employment increased by 0.6%, following a 0.6% rise in the 4th quarter of last year. As a result of the pickup in employment, the unemployment rate eased from 4.9% to 4.7%.

Business confidence figures were also positive, with the ANZ Business Confidence Index rising from -2 to +7 in May.

All the sub-components were on the rise in May. Export, investment, and employment intentions all saw strong increases as did capacity utilization and profit expectations.

For the Japanese Yen

It was a quiet week.

Finalized private sector PMIs for April were in focus in the week.

In April, the services PMI rose from 48.3 to 49.5, with firms optimistic over the ongoing vaccination programs globally.

The Japanese Yen rose by 0.65% to ¥108.60 against the U.S Dollar. In the week prior, the Yen had fallen by 1.33% to ¥109.31.

Out of China

It was a busier week on the data front.

The market’s preferred Caixin survey private sector PMIs and trade data were in focus in the week.

For April, the services PMI increased from 54.3 to 56.3. New orders grew at the fastest pace in 5-months, with the pace of job creation also accelerating. The pickup in the pace of hiring was supported by elevated optimism across the sector.

Trade data was also market risk positive, with imports (+43.1%) and exports (+32.3%) seeing marked increases in April. The U.S Dollar trade surplus widened from $13.80bn to $42.86bn.

In the week ending 7th May, the Chinese Yuan rose by 0.64% to CNY6.4332. In the week prior, the Yuan had risen by 0.33% to CNY6.4749.

The CSI300 fell by 2.49%, with the Hang Seng ended the week down by a more modest 0.40%.

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