The Weekly Wrap – Market Risk Appetite Returned, Weighing on the Greenback
It was a busier week on the economic calendar, in the week ending 15th October.
A total of 56 stats were monitored, which was up from 44 stats in the week prior.
Of the 56 stats, 17 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 12 stats that were in line with forecasts in the week.
Looking at the numbers, 21 of the stats reflected an upward trend from previous figures. Of the remaining 35 stats, 31 reflected a deterioration from previous.
For the Greenback, a pickup in market risk appetite weighed. In the week ending 15th October, the Dollar Spot Index fell by 0.14% to 93.937. In the previous week, the Dollar had risen by 0.03% to 94.067.
Out of the U.S
Early in the week, job openings and inflation were in focus.
Following softer than expected NFP numbers in the week prior, JOLT’s job openings fell from 11.098m to 10.439m in August.
Of greater significance, however, were inflation figures.
The annual core rate of inflation held steady at 4.0% in September, with core consumer prices up 0.2% in the month. Consumer prices rose by 0.4% off the back of a 0.3% increase in August.
Mid-week, the FOMC meeting minutes provided few surprises ahead of a busy end to the week.
On Thursday, initial jobless claims impressed. In the week ending 8th October, jobless claims fell from 329k to 293k.
Retail sales figures were also better than expected. In September, core retail sales increased by 0.8%, with retail sales up 0.7%. While better than forecasted sales were softer than in August.
Negative for the Dollar, however, was weaker consumer sentiment. In October, the Michigan Consumer Sentiment Index fell from 72.8 to 71.4.
Out of the UK
It was busier week.
On the employment front, claimant counts continued to decline in September (-51.1k) though at a softer pace than in August (-58.6k).
As a result of the upward trend in hiring, the unemployment rate fell from 4.6% to 4.5% in August.
Mid-week, industrial and manufacturing production delivered support. In August, industrial production and manufacturing production increased by 0.8% and by 0.5% respectively. Manufacturing production had fallen by 0.6% in the month prior.
Trade data disappointed, however, with the UK’s trade deficit widening from £12.71bn to £14.93bn.
GDP numbers for August delivered mixed results but good enough to support the Pound’s recovery.
Month-on-month, the economy grew by 0.4% after having contracted by 0.1% in July. Year-on-year, the economy grew by 6.9% after having expanded by 7.5% in July.
In the week, the Pound rallied by 1.00% to end the week at $1.3751. In the week prior, the Pound had risen by 0.51% to $1.3615.
The FTSE100 ended the week up by 1.95%, following on from a 0.97% gain from the previous week.
Out of the Eurozone
It was a quieter week.
Early in the week, ZEW Economic Sentiment figures for Germany and the Eurozone disappointed.
Germany’s ZEW Economic Sentiment index fell from 26.5 to 22.3, with the Eurozone’s down from 31.1 to 21.0.
For the Eurozone, industrial production and trade data were also on the weaker side, pegging the EUR back.
In August, industrial production fell by 1.6%, reversing a 1.5% increase from the month prior.
On the trade front, the Eurozone’s trade surplus narrowed from €20.7bn to €4.8bn.
For the week, the EUR rose by 0.28% to $1.1601. In the week prior, the EUR had fallen by 0.23% to $1.1569.
The EuroStoxx600 rallied by 2.65%, with the DAX30 and the CAC40 ending the week up by 2.51% and 2.55% respectively.
For the Loonie
Stats included manufacturing and wholesale sales figures for August.
Month-on-month, manufacturing sales rose by 0.5%, with wholesale sales rising by 0.3%. Both had been in decline in the previous month.
While the stats were Loonie positive, a pickup in risk appetite and rising crude oil prices were also key.
In the week ending 15th October, the Loonie rose by 0.83% to C$1.2368. In the week prior, the Loonie had risen by 1.39% to C$1.2472.
The Aussie Dollar rallied by 1.53% to $0.7421, with the Kiwi Dollar ending the week up by 1.84% to $0.7067.
For the Aussie Dollar
Business and consumer sentiment figures delivered mixed results ahead of weak employment figures.
In September, the NAB Business Confidence Index climbed from -5.0 to +13.0. Consumer sentiment waned in October, however, with the Westpac Consumer Confidence Index falling from 106.2 to 104.6.
Also negative was a pickup in Australia’s unemployment rate from 4.5% to 4.6%. Employment fell by a further 138.0k in September, after having declined by 146.3k in August.
For the Kiwi Dollar
Economic data was on the quieter side.
In September, electronic card retail sales increased by a modest 0.9% after having tumbled by 19.7% in August.
The Business PMI jumped from 40.1 to 51.4 in September, however, which was Kiwi Dollar positive.
For the Japanese Yen
It was a particularly quiet week, with stats limited to finalized industrial production figures.
In August, industrial production slid by 3.6%, which was down from a prelim 3.2% decline.
The Japanese Yen slid by 1.76% to ¥114.220 against the U.S Dollar. In the week prior, the Yen had fallen by 1.07% to ¥112.240.
Out of China
It was a relatively busy week, with trade and inflation figures in focus.
In September, China’s USD trade surplus widened from $58.34bn to $66.76bn, with exports up 28.1%. Exports had risen by 25.6% in August, year-on-year. Imports disappointed, however, rising by 17.6%, In August, imports had risen by 33.1% year-on-year.
Inflation figures delivered mixed results. While China’s annual rate of inflation softened from 0.8% to 0.7%, wholesale inflation was on the rise once more.
The annual rate of wholesale inflation accelerated from 9.5% to 10.7% in September.
In the week ending 15th October, the Chinese Yuan fell by 0.13% to CNY6.4357. In the week prior, the Yuan had ended the week up by 0.02% to CNY6.4438.
The CSI300 and the Hang Seng ended the week up by 0.04% and by 1.99% respectively.