The Weekly Wrap – Economic Data, COVID-19, and U.S Politics Influenced in the WeekIt was a busy week for the markets. COVID-19 news, a lack of progress on the U.S stimulus bill, monetary policy, and economic data provided direction.
It was a busy week on the economic calendar, in the week ending 14th August.
A total of 69 stats were monitored, following 59 stats from the week prior.
Of the 69 stats, 38 came in ahead forecasts, with 20 economic indicators coming up short of forecasts. 11 stats 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 39, 31 stats reflected a deterioration from previous.
For the Greenback, it was back into the red. In the week ending 14th August, the Dollar Spot Index fell by 0.36% to 93.096. In the week prior, the Dollar had risen by 0.09% to end a run of 6 consecutive weekly losses.
Negative sentiment towards the lack of progress on the COVID-19 stimulus package weighed in the week.
The downside came in spite of economic data being skewed to the positive.
Out of the U.S
It was another busy week on the economic data front.
In the 1st half of the week, July inflation figures were skewed to the positive, with inflationary pressures building.
The producer price index rose by 0.6%, reversing a 0.2% decline from June. Consumer prices were also on the rise, with the annual rate of core inflation picking up from 1.2% to 1.6%.
On Thursday, the initial jobless claims eased back for the 2nd time in 4-weeks adding further support.
Initial jobless claims stood at 963k in the week ending 7th August. In the week prior, initial jobless claims stood at 1,191k.
At the end of the week, July retail sales and industrial production and August consumer sentiment figures were in focus.
Retail sales rose by 1.20%, with core retail sales rising by 1.90% following more than 7% increases in June.
Industrial production also continued to recover, rising by 3.0% in July, following a 5.7% increase in June. Year-on-year, however, production was still down by 8.18%.
Rounding off a positive week, consumer sentiment also improved. The Michigan Consumer Sentiment Index increased from 72.5 to 72.9, according to prelim August figures.
In the equity markets, the NASDAQ and S&P500 rose by 0.08% and by 0.64% respectively. The Dow led the way, however, gaining by 1.81%.
Out of the UK
It was a particularly busy week on the economic calendar. On Tuesday, claimant count and unemployment figures were in focus.
A 94.4k jump in claimant counts in July was Pound negative, while June’s unemployment rate held steady at 3.9%.
On Wednesday, the focus shifted to the 2nd quarter GDP and June manufacturing production figures.
While manufacturing production jumped by 11%, following an 8.3% rise in May, GDP numbers shocked…
In the 2nd quarter, the UK economy contracted by 20.4%, following a 2.2% contraction in the 1st quarter. On an annualized basis, the economy contracted by 21.7%, following a 1.7% contraction in the 1st quarter.
There was not much else for the markets to consider in the week, leaving the Pound on the defensive.
In the week, the Pound rose by 0.26% to $1.3086. In the week prior, the Pound had fallen by 0.25% to $1.3052.
The FTSE100 ended the week up by 0.96%, following on from a 2.28% gain from the previous week.
Out of the Eurozone
It was a relatively busy week economic data front.
In the 1st half of the week, August’s ZEW Economic Sentiment figures for Germany and the Eurozone were in focus.
The stats were skewed to the positive, with the sentiment in both Germany and the Eurozone seeing a marked improvement.
Mid-week, the Eurozone’s industrial production figures for June failed to support, in spite of a 9% rise. Economists had forecast a 10% increase following a 12.3% jump in May.
At the end of the week, the Eurozone’s 2nd estimate GDP numbers for the 2nd were in focus.
According to the 2nd estimate figures, the Eurozone’s economy contracted by 12.1% in the 2nd quarter. This was in line with 1st estimates as was the year-on-year 2nd estimate GDP that was unchanged at -15%.
July’s finalized inflation figures for France, Germany, and Spain and Eurozone trade data had a muted impact in the week.
For the week, the EUR rose by 0.47% to $1.1842, following on from a 0.08% gain from the previous week.
For the European major indexes, it was another bullish week. The DAX30 rose by 1.79%, with the CAC40 and EuroStoxx600 gaining by 1.50% and by 1.24% respectively.
For the Loonie
It was a quiet week on the economic calendar.
Economic data included July housing stats and manufacturing sales figures.
There was little influence on the Loonie, however. OPEC and the IEA’s monthly reports, the weekly inventories, and market risk sentiment remained the key drivers.
Ultimately, U.S Dollar weakness driven by Capitol Hill and a sizeable drawdown in inventories provided support.
The Loonie rose by 0.88% to end the week at C$1.3266. In the week prior, the Loonie had risen by just 0.21%.
It was a mixed week for the Aussie Dollar and the Kiwi Dollar.
In the week ending 14th August, the Aussie Dollar rose by 0.20% to $0.7171, while the Kiwi Dollar fell by 0.95% to $0.6542.
For the Aussie Dollar
It was a relatively busy week for the Aussie Dollar.
Economic data included consumer and business confidence figures and wage growth and unemployment numbers.
It was a mixed bag for the Aussie Dollar in the week.
Both business and consumer confidence waned in July and August, respectively, as a result of the spike in new COVID-19 cases.
Wage growth was also lackluster in the 2nd quarter.
Employment figures for July were Aussie Dollar positive, however, providing support in the 2nd half of the week.
A 114.7k rise in employment and a 43.5k rebound in full employment limited the rise in the unemployment rate to 7.5%. Economists had forecast an unemployment rate of 7.8%.
For the Kiwi Dollar
It was a busy week on the economic calendar.
Key stats included July business confidence and electronic card retail sales figures early in the week.
Business confidence weakened, with electronic card retail sales only seeing a minor increase.
At the end of the week, the Business PMI rose from 56.3 to 58.8 in July to provide the Kiwi Dollar with support.
The main event of the week, however, was the RBNZ’s monetary policy decision.
While keeping interest rates steady at 0.25%, the RBNZ expanded its large scale asset purchase program to NZD100bn. The RBNZ also talked of the possibility of further support including negative rates.
With New Zealand reporting its first new COVID-19 cases in over 3-months, it was a bearish week for the Kiwi.
For the Japanese Yen
It was a particularly quiet week on the economic calendar.
There were no material stats from Japan to influence in the week.
A lack of stats left the Japanese Yen in the hands of geopolitics, COVID-19, and updates from Capitol Hill.
The Japanese Yen declined by 0.64% to ¥106.6 against the U.S Dollar. In the week prior, the Yen had fallen by 0.09%.
Out of China
It was another relatively busy week on the economic data front.
At the start of the week, July inflation figures provided support to riskier assets.
The annual rate of inflation picked up from 2.5% to 2.7%, with wholesale deflationary pressures easing. The producer price index fell by 2.4%, year-on-year, following a 3.0% slide in June.
At the end of the week, however, economic data tested market risk appetite.
Industrial production increased by 4.8%, year-on-year, with retail sales falling by 1.1%. Economists had forecast production to rise by 5.1% and for sales to increase by 0.1%.
In the week ending 14th August, the Chinese Yuan rose by 0.25% to CNY6.9504. In the week prior, the Yuan had risen by 0.10%.
The CSI300 slipped by 0.07%, while the Hang Seng gained 2.66%.