The Weekly Wrap – Economic Data and the Delta Variant Deliver Mixed Results

The Stats

It was a busier week on the economic calendar, in the week ending 2^nd July.

A total of 58 stats were monitored, which was up from 49 stats in the week prior.

Of the 58 stats, 26 came in ahead forecasts, with 26 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 25 reflected a deterioration from previous.

For the Greenback, economic data had delivered strong Dollar support ahead of Friday’s NFP numbers. In the week ending 2^nd July, the Dollar Spot Index rose by 0.41% to 92.226. In the previous week, the Dollar had fallen by 0.41% to 91.851.

Out of the U.S

After a quiet start to the week, consumer confidence figures impressed on Tuesday. The CB Consumer Confidence Index jumped to a 16-month high in June.

Mid-week, ADP nonfarm employment change figures pointed to another sharp increase in hiring. In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May.

On Thursday, the focus shifted to the weekly jobless claims and manufacturing sector PMI numbers.

In the week ending 25^th June, initial jobless claims fell from 415k to 365k.

Manufacturing sector activity saw slightly weaker growth in June, however, with the ISM Manufacturing PMI falling from 61.2 to 60.6.

While the stats delivered Dollar support, nonfarm payroll data at the end of the week was the key stat of the week.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

In the equity markets, the Dow rose by 1.02%, with the NASDAQ and the S&P500 ending the week up by 1.94% and by 1.67% respectively.

Out of the UK

It was another relatively quiet week, with GDP and finalized manufacturing sector PMI figures in focus.

The stats were skewed to the negative, with the UK economy contracting more than had been expected in the 1^st quarter.

Quarter-on-quarter, the economy contracted by 1.6%, revised down from a prelim 1.5%.

In June, the Manufacturing PMI fell from 65.6 to 63.9, which was revised down from a prelim 64.2.

Away from the economic calendar, concerns over the continued spread of the Delta variant added further downward pressure on the Pound.

In the week, the Pound fell by 0.40% to end the week at $1.3824. In the week prior, the Pound had risen by 0.50% to $1.3879.

The FTSE100 ended the week down by 0.18%, following a 1.69% gain from the previous week.

Out of the Eurozone

It was another busy week.

Economic sentiment figures for the Eurozone in focus on Tuesday.

A pickup in economic sentiment in June provided some EUR support early in the week.

Midweek, German unemployment and Eurozone inflation figures were in focus.

While unemployment numbers were EUR positive, inflationary pressures across the Eurozone softened in June.

According to prelim figures, the Eurozone’s annual rate of inflation softened from 2.0% to 1.9%.

On Thursday, manufacturing sector PMIs for June were positive, however.

Spain’s manufacturing PMI increased from 59.4 to 60.4, with Italy’s seeing a modest fall from 62.3 to 62.2.

Germany’s manufacturing PMI rose from 64.4 to 65.1, which was up from a prelim 64.9.

France’s manufacturing sector saw growth slow moderately, with the PMI falling from 59.4 to 59.0. This was up from a prelim 58.6, however.

As a result, the Eurozone’s manufacturing PMI rose from 63.1 to a record high 63.4, which was up from a prelim 63.1.

Eurozone unemployment figures for May were also upbeat, with the unemployment rate falling from 8.1% to 7.9%.

Retail sales figures from Germany were also market positive on Thursday. Retail sales rose by 4.2% partially reversing a 6.8% slide in April.

For the week, the EUR fell by 0.59% to $1.1865. In the week prior, the EUR had risen by 0.61% to $1.1935.

The DAX30 rose by 0.27%, while the CAC40 and the EuroStoxx600 ended the week down by 1.06% and by 0.18% respectively.

For the Loonie

GDP, RMPI, and trade data were in focus in the week.

The stats were skewed to the positive, with the Canadian economy contracting by less than forecasted. In April, the economy contracted by 0.3% versus a forecasted 0.8% contraction. The economy had expanded by 1.3% in March.

The RPMI jumped by 3.2% in May, following a 1.0% increase in April, the uptrend supporting the pickup in inflationary pressures globally.

At the end of the week, Canada’s trade balance fell from a C$0.59bn surplus to a C$1.39bn deficit, however. Economists had forecast a deficit of C$0.30bn.

In the week ending 2^nd July, the Loonie fell by 0.24% to C$1.2322. In the week prior, the Loonie had risen by 1.39% to C$1.2292.

Elsewhere

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

In the week ending 2^nd July, the Aussie Dollar fell by 0.84% to $0.7526, with the Kiwi Dollar declining by 0.66% to $0.7026.

For the Aussie Dollar

It was another quiet week. Private sector credit figures were in focus along with manufacturing sector and trade data.

The stats were skewed to the positive but were not strong enough to prevent a loss against the Greenback.

In May, private sector credit rose by 0.4%, following a 0.3% increase in April.

Manufacturing sector activity was also on the rise, with the AIG Manufacturing Index climbing from 61.8 to a new series high 63.2.

More significantly, however, was a widening in the trade balance from A$8.028bn to A$9.681bn in May. The widening was driven by a 6% jump in exports.

For the Kiwi Dollar

It was a relatively quiet week.

Business confidence was in focus mid-week.

In June, the ANZ Business Confidence Index fell by 3 points to -0.6%. Firm’s own activity index climbed by 5 points to +31.6%, however.

While building consents for May were also in focus, an unexpected 2.8% drop in consents having little impact on the Kiwi.

For the Japanese Yen

It was a busy week.

Retail sales figures for May came in ahead of forecasts early in the week. Year-on-year, retail sales was up by 8.2% versus a forecasted 7.9%. In April, retail sales had been up by 11.9%.

Mid-week, industrial production figures disappointed, however. Production slid by 5.9% according to prelim figures, reversing a 2.9% increase from April.

On Thursday, the focus then shifted to 2^nd quarter Tankan survey numbers.

While on the rise in the 2^nd quarter, only the All-Big Industry Capex beat forecasts, rising by 9.6% versus a forecasted 5.2%. In the 1^st quarter, the index had risen by 3%.

The Tankan Big Manufacturing Outlook Index increased from 4 to 13, with the Large Manufacturers Index up from 5 to 14. From the services sector, the Large Non-Manufacturers Index climbed from -1 to 3 in the 2^nd quarter.

The Japanese Yen fell by 0.27% to ¥111.05 against the U.S Dollar. In the week prior, the Yen had fallen by 0.49% to ¥110.750.

Out of China

Private sector PMI figures for June were in focus in the week.

The stats were skewed to the negative but were not weak enough to sound the alarm bells.

In June, the NBS manufacturing PMI slipped from 51.0 to 50.9, with the non-manufacturing PMI falling from 55.2 to 53.5.

The markets preferred Caixin Manufacturing PMI fell from 52.0 to 51.3.

In the week ending 2^nd July, the Chinese Yuan fell by 0.26% to CNY6.4730. In the week prior, the Yuan had fallen by 0.05% to CNY6.4562.

The CSI300 and the Hang Seng ended the week down by 3.03% and by 3.34% respectively.