The Weekly Wrap – Russia Invasion Overshadows Economic Data

The Stats

It was a busy week on the economic calendar for the week ending 25^th February.

A total of 57 stats were monitored, following 66 stats in the week prior.

Of the 57 stats, 35 came in ahead of forecasts, with 14 economic indicators coming up short of forecast. Eight stats 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 25 stats, 22 reflected a deterioration from previous numbers.

While the stats drew interest, geopolitics remained the key driver. Russia’s invasion of Ukraine weighed heavily on riskier assets in the week, with safe-haven demand supporting the Dollar.

Out of the U.S

Private sector PMI and consumer confidence figures drew attention early in the week. While consumer confidence weakened in February, private sector activity picked up. According to prelim figures, the all-important services PMI rose from 51.2 to 56.7.

In the 2^nd half of the week, Q4 GDP, jobless claims, inflation, personal spending, and core durable goods were in focus.

Jobless claims and GDP figures were market positive. Friday stats were mixed, however.

Core durable goods rose by 0.7% with personal spending jumping by 2.1% in January. Inflationary pressures ticked up, with the Core PCE Price Index up 5.2% year-on-year, in January. This was up from 4.9% in December.

In the week ending 25^th February, the Dollar Spot Index rose by 0.55% to end the week at 96.615. In the week prior, the Index increased by 0.02% to 96.106.

Out of the UK

Prelim private sector PMIs were key in the week. The stats were Pound positive. According to prelim figures, the UK’s services PMI jumped from 54.1 to 60.8. Manufacturing sector activity held steady, supporting a rise in the composite from 54.2 to 60.2.

In the week, the Pound slid by 1.14% to end the week at $1.3409. In the week prior, the Pound had risen by 0.18% to $1.3589.

The FTSE100 ended the week down 2.24%, following a 1.92% loss from the previous week.

Out of the Eurozone

It was a busy week for the EUR.

Early in the week, private sector PMI numbers for France, Germany, and the Eurozone were in focus. The numbers were positive, with the Eurozone’s composite PMI rising from 52.3 to 55.8.

Mid-week, German business, and consumer sentiment figures delivered mixed results ahead of upward revisions to GDP numbers for Q4. Germany’s IFO Business Climate Index rose from 96.0 to 98.9, while the GfK Consumer Climate Indicator fell from -6.7 to -8.1.

In the 4^th quarter, the German economy contracted by 0.3%, up from a 1^st estimate 0.7% contraction.

Other stats included inflation figures that took a back seat as the markets responded to news updates on the Russian invasion of Ukraine.

For the week, the EUR fell by 0.72% to $1.1268. In the previous week, the EUR declined by 0.25% to $1.1322.

The DAX slid by 5.56%, with the CAC40 and the EuroStoxx600 ending the week down by 3.70% and by 3.42%, respectively.

 

For the Loonie

There were no material stats for the markets to consider, leaving the Loonie in the hands of market risk sentiment.

In the week ending 25^th February, the Loonie rose by 0.19% to C$1.2713 against the Greenback. In the week prior, the Loonie had fallen by 0.12% to C$1.2752.

Elsewhere

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

The Aussie Dollar rose by 1.25% to $0.0.7226, with the Kiwi Dollar rallying by 1.38% to end the week at $0.6743.

For the Aussie Dollar

Wage growth was the key area of focus in the week, with wages rising by 0.7% in Q4. In the previous quarter, wages rose by 0.6%.

Other stats included construction work done and private new CAPEX figures that had a muted impact on the Aussie Dollar.

For the Kiwi Dollar

The RBNZ was in action mid-week, lifting the cash rate by 25 bps to 1.0%. It was in line with market expectations.

At the end of the week, retail sales and trade data delivered mixed results. Retail sales bounced back in the 4^th quarter, while New Zealand’s trade deficit widened in January.

Key was the rebound in retail sales that supported the Kiwi Dollar late in the week.

For the Japanese Yen

Prelim February private sector PMI and February inflation figures were key stats in the week.

A more marked contraction in the services sector and slower manufacturing sector activity disappointed. The services PMI fell from 47.6 to 42.7 in February.

On Friday, Tokyo inflation failed to move the dial. Tokyo’s core annual rate-of-inflation rose from 0.2% to 0.5% in February.

The Japanese Yen fell by 0.11% to end the week at ¥115.550 against the Dollar. In the week prior, the Yen ended the week down by 0.14% to ¥115.420.

Out of China

There were no stats for the markets to consider in the week.

In the week ending 25^th February, the Chinese Yuan rose by 0.58% to CNY6.3175. Through the week prior, the Yuan had ended the week up by 0.46% to CNY6.3256.

The Hang Seng Index ended the week down by 8.59%, with the CSI300 falling by 0.61%.