The Weekly Wrap – Economic Data, COVID-19, and U.S Politics Were in FocusIt was a particularly busy week for the markets. Economic data from the U.S impressed, with expectations of sizeable stimulus also driving support for riskier assets.
It was a busy week on the economic calendar, in the week ending 22nd January.
A total of 74 stats were monitored, following 46 stats from the week prior.
Of the 74 stats, 37 came in ahead forecasts, with 31 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.
Looking at the numbers, 37 of the stats reflected an upward trend from previous figures. Of the remaining 37 stats, 31 reflected a deterioration from previous.
For the Greenback, it was back into the red after two consecutive weekly gains, with the Dollar Spot Index falling by 0.59% to $90.238. In the previous week, the Dollar had risen 0.75% to 90.772.
Out of the U.S
It was a relatively quiet week on the economic data front, with no stats through the 1st half of the week.
On Thursday, a fall in the jobless claims from 926k to 900k in the week ending 15th January failed to impress.
Philly FED Manufacturing numbers were marginally better, with the January PMI up from 11.1 to 26.5.
While the numbers eased demand for the Dollar, the numbers failed to support the U.S equity markets on the day.
On Friday, prelim private sector PMI figures were more impressive, however.
The manufacturing PMI rose from 57.1 to 59.1, with the all-important services PMI rising from 54.8 to 57.5.
Other stats in the week included December housing sector figures that had a muted impact on the majors.
Away from the economic calendar, talk of sizeable stimulus to support the economic recovery sent the Dollar into the red for the week.
In the equity markets, the NASDAQ rallied by 4.19%, with the Dow and the S&P500 gaining 0.59% and 1.94% respectively. Corporate earnings delivered the upside for the NASDAQ in the week.
Out of the UK
It was a relatively busy week on the economic data front.
December inflation figures were in focus in the 1st half of the week.
A pickup in inflationary pressures provided Pound support on Wednesday, leading to a rise to $1.37 levels on Thursday.
The annual rate of inflation picked up from 0.30% to 0.60%, with consumer prices rising by 0.30% in December. Consumer prices had fallen by 0.10% in November.
Adding further support to the Pound was a pickup in wholesale inflationary pressures.
The Producer Price Input Index rose by 0.80% in December, following a 0.40% increase in November.
Stats through the remainder of the week were skewed to the negative, however, leading to a pullback in the Pound on Friday.
While December retail sales came up short of forecasts, it was prelim private sector PMI figures for January that weighed.
The manufacturing PMI fell from 57.5 to 52.9, with the services PMI sliding from 49.4 to 38.8.
In the week, the Pound rose by 0.71% to $1.3686, with a 0.34% fall on Friday paring some of the gains. In the week prior, the Pound had risen by 0.16% to $1.3590.
The FTSE100 ended the week down by 0.60%, following a 2.00% slide from the previous week.
Out of the Eurozone
It was a particularly busy week on the economic data front.
In the 1st half of the week, economic sentiment figures for Germany and the Eurozone were in focus.
The stats were skewed to the positive, with the ZEW Economic Sentiment Indicator for Germany rising from 55.0 to 61.8.
Sentiment towards the Eurozone’s economy also improved, with the indicator rising from 54.4 to 58.3.
On Thursday, consumer confidence waned, however. The Eurozone’s flash consumer confidence index slipped from -13.9 to -15.5.
Wrapping up the week, were January’s prelim private sector PMIs.
It was a mixed bag. The services sector contracted at a faster pace, weighing on the Eurozone’s composite PMI. In January, the Eurozone’s Composite PMI fell from 49.1 to 47.5.
Manufacturing sector activity picked up in France, while activity in Germany eased at the start of the year. As a result, the Eurozone’s manufacturing PMI fell from 55.2 to 54.7.
On the monetary policy front, the ECB stood pat on monetary policy, leaving the focus on the press conference. A cautious tone over concerns of the impact of extended lockdown measures weighed on the European majors. The impact on the EUR was relatively muted, however.
For the week, the EUR rose by 0.74% to $1.2171. In the week prior, the EUR had fallen by 1.11% to $1.2082.
For the European major indexes, it was a mixed week. The DAX30 and the EuroStoxx600 rose by 0.63% and by 0.17% respectively, while the CAC40 fell by 0.93%.
The ECB press conference and private sector PMIs from the Eurozone weighed on the majors late in the week.
For the Loonie
It was a particularly busy week.
Key stats included December inflation and November retail sales figures.
While the core annual rate of inflation held steady at 1.5% in December, consumer prices fell in the month. Core consumer prices fell by 0.4%, with consumer prices falling by 0.2%.
Retail sales figures for November impressed, however. Core retail sales jumped by 2.1%, with retails sales rising by 1.3% in the month.
While the stats were Loonie positive, a bearish end to the week left the Loonie flat. Disappointing crude oil inventory numbers pinned the Loonie back.
On the monetary policy front, the BoC delivered its first monetary policy decision of the year on Wednesday.
There were no major surprises, however.
In the week, the Loonie fell by just 0.01% to C$1.2733. In the week prior, the Loonie had fallen by 0.24% to C$1.2732.
In the week ending 22nd January the Aussie Dollar rose by 0.16% to $0.7715, with the Kiwi Dollar ended the week up by 0.79% to $0.7189.
For the Aussie Dollar
It was a relatively quiet week.
Consumer confidence, employment, and retail sales were in focus.
In January, the Westpac Consumer Sentiment Index slipped by 4.5% to 107.0, reversing a 4.1% gain from December.
Retail sales figures from January also disappointed, with sales falling by 4.2%, month-on-month. In December, retail sales had surged by 7.1% as a result of an easing of containment measures in Victoria.
Employment numbers were skewed to the positive, however, with the unemployment rate falling from 6.8% to 6.6%.
Employment rose by 50.0k in December, following on from a 90.0k jump in November.
Full employment rose by 35.7k in the month. In November, full employment had risen by 84.2k.
While the numbers were positive, the fall in the unemployment rate was largely attributed to a rise in part-time employment. This was ultimately Aussie Dollar negative on the release.
For the Kiwi Dollar
It was relatively busy week.
Business confidence, retail sales, business PMI, and inflation figures were in focus.
In the 4th quarter, Business confidence improved, with the NZIER Business Confidence Index rising from -38% to -16%.
Electronic card retail sales also delivered support, with December sales up by 3.5% year-on-year. In November, sales had been up by 1.4%.
It was a mixed set of numbers at the end of the week, however.
The Business PMI slid from 55.3 to 48.7 in December, weighing on the Kiwi.
Inflation figures provided support, however, with the annual rate of inflation holding steady at 1.4% in Q4. Economists had forecast an annual rate of inflation of 1.0%.
Quarter-on-quarter, consumer prices rose by 0.5%, following a 0.7% increase in the 3rd quarter.
For the Japanese Yen
It was a busy week.
Industrial production fell by 0.5% in November, partially reversing a 4.0% rise in October.
Trade data was skewed to the positive, however, with the trade surplus widening from ¥366.1bn to ¥751.0bn.
Exports rose by 2%, while imports slumped by 11.6%.
While exports to China rose by 2.7%, exports to the U.S tumbled by 17.3%, with exports to Europe sliding by 15.1%.
At the end of the week, private sector PMI and inflation figures were skewed to the negative.
Core consumer prices fell by 1.0% in December, year-on-year, following a 0.9% decline in November.
Manufacturing sector activity contracted, with the PMI falling from 50.0 to 49.7 in January. The services sector contracted at a faster pace, however, with the PMI sliding from 47.7 to 45.7.
On the monetary policy front, the BoJ was also in action, though there were no moves to impact the Yen.
The Japanese Yen rose by 0.07% to ¥103.78 against the U.S Dollar. In the week prior, the Yen had risen by 0.09% to ¥103.85.
Out of China
4th quarter GDP and December industrial production figures were in focus.
In the 4th quarter, the economy expanded by 2.6%, quarter-on-quarter, following 2.7% growth in the 3rd quarter. Year-on-year, the economy grew by 6.5%, following 4.9% growth in the 3rd quarter.
Industrial production rose by 7.3% year-on-year, in December, following a 7.0% increase in November.
Other stats included fixed asset investment, retail sales, and unemployment figures.
While the unemployment rate held steady at 5.2% retail sales grew by a more modest 4.6%, year-on-year. In November, sales had risen by 5.0%.
Fixed asset investment picked up, however, rising by 2.9% year-on-year. In November, fixed asset investment had risen by 2.6%.
While the stats were skewed to the positive, news of new COVID-19 cases in China tested support for riskier assets.
In the week ending 22nd January, the Chinese Yuan fell by 0.02% to CNY6.4819. In the week prior, the Yuan had fallen by 0.10% to CNY6.4809.
The CSI300 rose by 2.05%, with the Hang Seng ended the week up by 3.06%.