The Weekly Wrap – Economic Data, COVID-19, and the Dollar Rebound

The Stats

It was a slightly busier week on the economic calendar, in the week ending 26^th March.

A total of 56 stats were monitored, following 53 stats from the week prior.

Of the 56 stats, 34 came in ahead forecasts, with 22 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 35 of the stats reflected an upward trend from previous figures. Of the remaining 21 stats, 21 reflected a deterioration from previous.

For the Greenback, it was a 2^nd consecutive weekly in the green. In the week ending 26^th March, the Dollar Spot Index rallied by 0.92% to 92.766. In the previous week, the Dollar had risen by 0.26% to 91.919.

Out of the U.S

While it was a busy week on the economic data front, though it was a quiet start to the week.

Prelim private sector PMIs for March were market positive, with the service PMI rising from 59.8 to 60.0. The Manufacturing PMI increased from 58.6 to 59.0.

Core durable goods orders disappointed, however, falling by 0.9% in February.

On Thursday, jobless claims figures reflected improvement in labor market conditions. In the week ending 19^th February, initial jobless claims fell from 781k to 684k.

At the end of the week, the stats were skewed to the negative, however.

Inflationary pressures softened, with the Core PCE Price Index rising by 1.4% year-on-year in February. In January, the index had risen by 1.5%.

Personal spending slid by 1% in February, partially reversing a 3.4% jump from January.

Other stats included trade data and finalized consumer sentiment figures that had a muted impact on the Dollar.

On the monetary policy front, FED Chair Powell testimony also delivered Dollar support in the week.

In the equity markets, the NASDAQ fell by 0.58%, while the Dow and the S&P500 rose by 1.36% and by 1.57% respectively.

Out of the UK

It was a busy week on the economic data front.

Employment figures delivered mixed results early in the week.

While the unemployment rate fell from 5.1% to 5.0% in January, claimant counts increased by 86.6k in February. In January, claimant counts had fallen by 20.8k.

Mid-week, inflation figures showed that inflationary pressures had softened in February.

The annual rate of inflation eased from 0.7% to 0.4% in February.

While inflation figures disappointed, private sector PMIs impressed.

In March, the services PMI jumped from 49.5 to 56.8, with the manufacturing PMI rising from 55.1 to 57.9.

The numbers follow the BoE’s monetary policy decision and optimistic outlook from the week prior.

At the end of the week, retail sales figures were largely better than expected.

Core retail sales increased by 2.4% in February, partially reversing an 8.8% slide from January.

Retail sales increased by 2.1%, partially reversing an 8.2% slide from January.

Year-on-year, however, retail sales and core retail sales remained in the red mid-way through the quarter.

Core retail sales fell by 1.1% year-on-year, with retail sales sliding by 3.7%, year-on-year.

In the week, the Pound fell by 0.60% to end the week at $1.3789. In the week prior, the Pound had fallen by 0.37% to $1.3872.

The FTSE100 ended the week up by 0.48%, partially reversing a 0.78% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Private sector PMIs and German consumer and business sentiment figures were on focus.

It was an impressive set of numbers from Eurozone member states.

The Eurozone’s Services PMI increased from 45.7 to a 7-month high 48.8 in March, according to prelim figures versus a forecasted 46.0.

In March, the Eurozone’s Manufacturing PMI rose from 57.9 to a record high 62.4 versus a forecasted 57.7.

The pickup in the Eurozone PMI numbers came off the back of a marked pickup in private sector PMI numbers from France and Germany.

Germany’s manufacturing PMI jumped from 60.7 to a record high 66.6, with the services sector returning to growth.

German Consumer and Business Confidence

For April, Germany’s GfK Consumer Climate Index rose from -12.7 to -6.2.

A marked increase in income expectations, which hit a 12-month high, supported the jump in confidence.

On the business front, Germany’s IFO Business Climate Index increased from a revised 92.7 to 96.6.

Supporting the uptick in the headline figures was a jump in the business expectations sub-index from a revised 94.2 to 100.4.

The current assessment sub-index was also on the rise, increasing from 90.6 to 90.3.

While the stats were skewed to the positive, a spike in new COVID-19 cases weighed on the EUR. The reintroduction of lockdown measures in some member states raised concerns over the economic outlook.

In the week, the ECB’s Economic Bulletin also talked of possible risks to the recovery. The Bulletin talked of vaccination rates, new cases, and containment measures, which coincided with the rising new cases across the bloc.

For the week, the EUR slid by 0.92% to $1.1794. In the week prior, the EUR had fallen by 0.41% to $1.1904.

The CAC40 fell by 0.15%, while the DAX30 and EuroStoxx600 ended the week gains of 0.88% and 0.85% respectively.

For the Loonie

It was a quiet week, with no material stats to provide the Loonie with direction.

The lack of stats left the Loonie in the hands of market risk sentiment and crude oil inventories and news.

In the week ending 26^th March, the Loonie fell by 0.62% to C$1.2577. In the week prior, the Loonie had slipped by 0.20% to C$1.2500.

Elsewhere

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

In the week ending 26^th March, the Aussie Dollar fell by 1.36% to $0.7637, with the Kiwi Dollar ending the week down by 2.30% to $0.7000.

For the Aussie Dollar

It was another quiet week.

There were no material stats to provide the Aussie Dollar with direction.

A lack of stats left the Aussie Dollar in the hands of yield differentials and market risk sentiment.

For the Kiwi Dollar

It was a relatively quiet week.

February trade figures were in focus mid-week.

Month-on-month, the New Zealand trade balance rose from a NZ$647m deficit to a NZD181m surplus.

Year-on-year, however, the trade surplus narrowed from NZ$2,730m to NZ$2,360m.

• The value of goods exported fell NZ$416m compared with the same period last year.
• Exports were down to all New Zealand’s top trading partners, with the exception of China.
• To China, exports increased NZ$369m from February 2020.
• Weaker dairy sales weighed on overall exports in February.
• The value of imports fell by NZ$46m to $4.3bn in February 2021.

For the Japanese Yen

It was a relatively busy week.

Prelim private sector PMI figures for March were in focus mid-week ahead of inflation figures on Friday.

The stats were skewed to the positive, with Japan’s manufacturing PMI rising from 51.4 to 52.0.

For the services sector, the PMI increased from 46.3 to 46.5.

On the inflation front, deflationary pressures eased in March. Year-on-year, Tokyo core consumer prices fell by 0.1% after having fallen by 0.3% in February.

Ultimately, the stats had a muted impact on the Japanese Yen, however.

The Japanese Yen fell by 0.70% to ¥109.64 against the U.S Dollar. In the week prior, the Yen had risen by 0.14% to ¥108.88.

Out of China

It was a quiet week on the data front.

There were no material stats to provide the markets with direction in the week.

On the monetary policy front, the PBoC left loan prime rates unchanged, which was in line with expectations.

The lack of stats left the markets to focus on geopolitics and China’s reaction vis-a-vis forced labor in the Xinjiang region.

In the week ending 26^th March, the Chinese Yuan fell by 0.49% to CNY6.5411. In the week prior, the Yuan had fallen by 0.01% to CNY6.5090.

The CSI300 rose by 0.62%, while the Hang Seng ending the week down by 2.26%.