The Weekly Wrap – Talk of Lockdowns and Economic Data Delivered Dollar Support

The Stats

It was a busier week on the economic calendar, in the week ending 19^th November.

A total of 60 stats were monitored, which was up from 39 stats in the week prior.

Of the 60 stats, 36 came in ahead forecasts, with 16 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 38 of the stats reflected an upward trend from previous figures. Of the remaining 22 stats, 17 reflected a deterioration from previous.

For the Greenback, it was a 4^th consecutive week in the green. Market reaction to economic data and lockdown chatter in Europe delivered the upside in the week. In the week ending 19^th November, the Dollar Spot Index rose by 0.95% to 96.031. In the previous week, the Dollar had risen by 0.85% to 95.122.

Out of the U.S

Through the 1^st half of the week, retail sales figures impressed, in spite of the marked pickup in inflationary pressure.

In October, core retail sales rose by 1.7%, with retail sales also up 1.7%. Retail sales had risen by 0.5% in September, with core retail sales having risen by 0.70%.

On Thursday, Philly FED Manufacturing PMI figures and the weekly jobless claims also drew interest.

The Philly FED Manufacturing PMI increased from 23.8 to 39.0, with the upside coming in spite of continued supply chain disruptions.

Jobless claims figures were less impressive, however, with initial jobless claims falling from 269k to 268k in the week ending 12^th November.

Out of the UK

It was a busy week, with employment, inflation, and retail sales figures in focus.

The stats were skewed to the positive.

In September, the unemployment rate fell from 4.5% to 4.3%, supported by a 247k increase in employment. Claimant counts continued to decline in October, which was also positive.

Inflation figures also raised the prospects of a move by the BoE. In October, the UK’s annual rate of inflation accelerated from 3.1% to 4.2%. Wholesale inflationary pressure also picked up, with the PPI Input Index up 1.4% in the month. In September, the index had risen by 0.8%.

Retail sales were also on the rise, however, in spite of the pickup in consumer prices.

In October, core retail sales increased by 1.6%, with retail sales rising by 0.8% in the month.

In the week, the Pound rose by 0.28% to end the week at $1.3451. The Pound had fallen by 0.62% to $1.3414 in the previous week.

The FTSE100 ended the week down by 1.69%, reversing a 0.60% gain from the previous week.

Out of the Eurozone

Early in the week, Eurozone trade data was in focus ahead of Eurozone GDP numbers for the 3^rd quarter.

In September, the Eurozone’s trade surplus widened from €3.5bn to €7.3bn, with both exports and imports on the rise. Year-on-year, intra-euro area trade was up 16.4%.

2^nd estimate GDP numbers for the 3^rd quarter were in line with 1^st estimates, providing support. In the 2^nd quarter, the economy expanded by 2.2%, with the economy growing by 3.7% year-on-year.

Mid-week, Eurozone inflation failed to deliver EUR support in spite of another pickup in inflationary pressure.

In October, the Eurozone’s annual rate of inflation accelerated from 3.4% to 4.1%, which was in line with prelim figures.

At the end of the week, German wholesale inflation figures also had a muted impact on the EUR. In October, Germany’s wholesale rate of inflation accelerated from 14.2% to 18.4%.

From the ECB, the Financial Stability Review provided few surprises, while ECB President Lagarde weighed on the EUR.

In a number of speeches throughout the week, the ECB President continued to assure the markets of status quo on the interest rate front…

Late in the week, concerns over new lockdown measures added further downward pressure on the EUR.

For the week, the EUR slid by 1.35% to $1.1290. In the week prior, the EUR had fallen by 1.05% to $1.1445.

The EuroStoxx600 fell by 0.14%, while the CAC40 and the DAX40 ended the week with gains of 0.29% and 0.41% respectively.

For the Loonie

Key stats included inflation and retail sales figures, with the stats mixed in the week.

In October, Canada’s annual core rate of inflation picked up from 3.7% to 3.8%, with consumer prices rising by 0.7% in the month.

Retail sales hit reverse, however. In September, core retail sales fell by 0.2%, with retail sales down 0.6%. Core retail sales and retail sales had risen by 2.8% and by 2.1% respectively in August.

In the week ending 19^th November, the Loonie declined by 0.72% to C$1.2640. In the week prior, the Loonie had fallen by 0.75% to C$1.2550.

Elsewhere

It was yet another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slid by 1.32% to $0.7235, with the Kiwi Dollar ending the week down by 0.57% to $0.7004.

For the Aussie Dollar

Wage growth was in focus.

In the 3^rd quarter, wages grew by 0.6% quarter-on-quarter versus a forecasted 0.5% increase. Wages had grown by 0.4% in the previous quarter. Year-on-year, wages grew by 2.2%.

The annual growth rate returned to a more regular September quarter pattern of wage growth, following the labor market disruptions through 2020 and 2021.

On the monetary policy front, the RBA meeting minutes also drew interest but failed to prevent another fall in the week.

For the Kiwi Dollar

Wholesale inflation figures failed to deliver support.

In the 3^rd quarter, New Zealand’s PPI Input Index increase by 1.6% quarter-on-quarter. The index had risen by 3.0% in the previous quarter.

For the Japanese Yen

Japan’s GDP numbers and trade data drew interest.

In the 3^rd quarter, the Japanese economy contracted by 0.8% quarter-on-quarter and by 3.0% year-on-year. The economy had expanded by 0.4% in the previous quarter.

Trade data also failed to impress, with exports slowing. In October, Japan’s trade deficit narrowed from ¥624.1bn to 67.4bn. Exports were up 9.4% year-on-year compared with 13.0% in September.

The Japanese Yen fell by 0.09% to ¥113.99 against the U.S Dollar. In the week prior, the Yen had fallen by 0.42% to ¥113.890.

Out of China

Industrial production and retail sales figures were key stats in the week.

Industrial production rose by 3.5% year-on-year in October, which was up from 3.1% in September. Retail sales increased by 4.9%, which was up from 3.6% in the month prior.

In the week ending 19^th November, the Chinese Yuan fell by 0.12% to CNY6.3871. In the week prior, the Yuan had ended the week up by 0.30% to CNY6.3797.

The CSI300 rose by 0.03%, while the Hang Seng ended the week down by 1.10%.