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The Weekly Wrap – Russia and the Ukraine Overshadow Economic Data

By:
Bob Mason
Published: Feb 18, 2022, 23:37 UTC

The Greenback held steady in the week. While the FOMC meeting minutes were less hawkish, safe haven demand provided support.

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In this article:

The Stats

It was a busy week on the economic calendar in the week ending 18th February.

A total of 66 stats were monitored, following 31 stats in the week prior.

Of the 66 stats, 33 came in ahead forecasts, with 26 economic indicators coming up short of forecasts. There were 7 stats that were in line with forecasts in the week.

Looking at the numbers, 32 of the stats reflected an upward trend from previous figures. Of the remaining 34 stats, 28 reflected a deterioration from previous.

While the stats drew interest, geopolitical risk was the key driver in the week. The threat of Russia invading the Ukraine drove demand for the safe havens in the week.

Out of the U.S

Wholesale inflation and retail sales figures drew plenty of attention in the 1st half of the week. The numbers were positive, supporting the FED’s stance on monetary policy.

In spite of rising consumer prices, retail sales jumped by 3.8% in January, reversing a 2.5% decline from December. Wholesale inflationary pressures were also on the rise, with the producer price index increasing by 1.0% in January. The index had risen by a more modest 0.4% in December.

In the 2nd half of the week, jobless claims were key. In the week ending 11th January, initial jobless claims climbed from 225k to 248k. The numbers were not weak enough to derail FED rate hike plans.

On the monetary policy front, the FOMC meeting minutes were also key. The minutes revealed that members were willing to consider rate hikes on a meeting-by-meeting basis instead of inking in rate hikes through H1. The minutes were considered more dovish than anticipated, providing some support to riskier assets.

In the week ending 18th February, the Dollar Spot Index rose by 0.02% to end the week at 96.106. In the week prior, the Index had risen by 0.63% to 96.082.

Out of the UK

It was an important week on the economic data front. Claimant counts, inflation, and retail sales were key stats to define BoE monetary policy near-term.

The stats were Pound positive. Claimant counts slid by 31.9k, leaving the unemployment rate steady at 4.1%. The UK’s annual rate of inflation picked up from 5.4% to 5.5% in January.

At the end of the week, retail sales also sent bullish signals for the Pound. Month-on-month, core retail sales rose by 1.7%, with retail sales up by 1.9%. The pickup in consumption came in spite of a continued rise in consumer prices in the New Year.

In the week, the Pound rose by 0.18% to end the week at $1.3589. In the week prior, the Pound had risen by 0.24% to $1.3564.

The FTSE100 ended the week down by 1.92%, reversing a 1.92% gain from the previous week.

Out of the Eurozone

Economic sentiment figures for Germany and the Eurozone and Eurozone GDP numbers were key early in the week.

It was a mixed set of numbers. While 4th quarter GDP numbers were in line with 1st estimates for the Eurozone, economic sentiment figures disappointed. Germany’s ZEW Economic Sentiment Index rose from 51.7 to 54.3, while the Eurozone’s fell from 49.4 to 48.6.

Other stats for the Eurozone were mixed, however, supporting the ECB’s view on the economy at the turn of the year.

Industrial production rose by a further 1.2% off the back of a 2.4% increase in November. The Eurozone’s trade deficit widened, however, as supply chain constraints weighed. In December, the Eurozone’s trade deficit widened from €1.5bn to €4.6bn.

For the week, the EUR fell by 0.25% to $1.1322. In the week prior, the EUR had fallen by 0.86% to $1.1350.

The DAX slid by 2.47%, with the CAC40 and the EuroStoxx600 ending the week down by 1.17% and by 1.87% respectively.

For the Loonie

Inflation and retail sales were key stats in the week. The numbers were mixed, with consumer prices on the rise, while retail sales hit reverse.

In January, Canada’s core annual rate of inflation accelerated from 4.0% to 4.3%, with core consumer prices up 0.8% in the month. Retail sales slid by 1.8% in December, however, with core retail sales down by 2.5%.

In the week ending 18th February, the Loonie fell by 0.12% to C$1.2752 against the Greenback. In the week prior, the Loonie had risen by 0.16% to C$1.2737.

Elsewhere

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

The Aussie Dollar rose by 0.56% to $0.7177, with the Kiwi Dollar gaining by 0.69% to end the week at $0.6697.

For the Aussie Dollar

Employment figures were in focus late in the week. In January, the unemployment rate held steady at 4.2%. While full employment fell by 17k, employment increased by 12.9k in the month.

For the Kiwi Dollar

Wholesale inflation drew attention on Friday. In the 4th quarter, the producer input price index increased by 1.1%, quarter-on-quarter, after having risen by 1.6% in the previous quarter.

For the Japanese Yen

Key stats included 4th quarter GDP, trade, and inflation figures.

In the 4th quarter, the economy grew by 1.3%, quarter-on-quarter, reversing a 0.9% contraction from the third. Year-on-year, the economy expanded by 5.4% after having contracted by 3.6% in the previous quarter.

Trade data disappointed, however, with exports seeing a modest rise versus imports. As a result, Japan’s trade deficit widened from ¥583.3bn to ¥2,191.1bn in January.

On the inflation front, Japan’s core annual rate of inflation softened from 0.5% to 0.2% in January.

The Japanese Yen rose by 0.14% to end the week at ¥115.420 against the U.S Dollar. In the week prior, the Yen had ended the week flat at ¥115.260.

Out of China

Inflation was also in focus. In January, China’s annual rate of inflation softened from 1.5% to 0.9%. Wholesale inflationary pressures also softened. China’s annual wholesale rate of inflation came in at 9.1%, down from 10.3% in December.

In the week ending 18th February, the Chinese Yuan rose by 0.46% to CNY6.3256. In the week prior, the Yuan had ended the week up by 0.10% to CNY6.3546.

The Hang Seng Index ended the week down by 2,32%, while the CSI300 gained 1.08%.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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