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The Weekly Wrap – Talks of Reopening Economies Overshadowed the IMF and Economic Data

By:
Bob Mason
Updated: Apr 18, 2020, 04:07 UTC

Talk of a phased reopening of the U.S overshadowed dire economic data and some alarming IMF economic forecasts, as new cases saw a downtrend.

Covid-19 Coronavirus concept. Medical mask with red dot inf

The Stats

It was a relatively busy week on the economic calendar, in the week ending 17th April.

A total of 44 stats were monitored, following the 41 stats in the week prior.

Of the 44 stats, 14 came in ahead forecasts, with 23 economic indicators coming up short of forecast. 7 stats were in line with forecasts in the week.

Looking at the numbers, just 17 of the stats reflected an upward trend from previous figures. Of the remaining 27, 23 stats reflected a deterioration from previous.

For the Greenback, it was a relatively bullish week, with the dollar recovering some of last week’s 1.09% loss. The U.S Dollar Spot Index rose by 0.30% to end the week at 99.782.

Economic data continued to take a back seat in the week. Once more, the markets were focused on the coronavirus numbers and government plans to ease containment measures.

As at the time of writing, the total number of coronavirus cases stood at 2,248,037, which was up from last Friday’s 1,697,533.

In the U.S, the total rose to 709,201, with France, Germany, Italy, and Spain reporting a combined total of 652,639.

Out of the U.S

It was a busier week on the economic calendar, with the economic data skewed to the negative.

March retail sales and industrial production figures and April manufacturing numbers were in focus on Wednesday

Core retail sales fell by 4.5%, with retail sales sliding by 8.7%. Industrial production figures were no better in March, with production falling by 5.4%, month-on-month.

On the manufacturing front, NY Empire State Manufacturing Index tumbled from -21.5 to -78.2 in April.

On Thursday, the numbers no better, with the Philly FED Manufacturing Index sliding from -12.7 to -56.6.

The weekly jobless claims figures continued to shock, with initial jobless claims rising by another 5.245m.

While the stats were skewed to the negative, talk of a phased easing of lockdown measures across the U.S was positive.

The markets were even able to brush aside the dire IMF economic forecasts that spooked the markets on Wednesday.

In the equity markets, the NASDAQ rallied by 6.09%, with the Dow and S&P500 gaining 2.21% and 3.04% respectively.

Out of the UK

It was a particularly quiet week on the economic calendar.

Economic data was limited to March retail sales figures that delivered no surprises. The BRC Retail Sales Monitor fell by 3.5%, year-on-year, following a 0.4% decline in February.

With economic data on the lighter side, support came from news of British PM Johnson coming out of ICU.

While it wasn’t plane sailing through the week, risk appetite ultimately supported the Pound in the week.

In the week, the Pound rose by 0.35% to $1.2499. The FTSE100 ended the week down by 0.95%, partially reversing a 7.89% gain from the previous week.

Out of the Eurozone

It was a quiet week economic data front. The stats had a muted impact on the EUR and the European equity markets, however.

Finalized March inflation figures for France, Germany, Italy, and the Eurozone had little impact. February industrial production figures for the Eurozone also failed to move the dial.

The acceptance of a coronavirus fueled economic meltdown limited the impact as the markets looked forward.

News of some easing of containment measures in Italy and other EU member states was EUR positive.

It wasn’t enough to deliver a 2nd consecutive week in the green, however. The IMF’s forecasts, disappointment over the EU Stimulus package and economic forecasts pinned the EUR back.

For the week, the EUR fell by 0.57% to $1.0875, partially reversing a 1.26% gain from the previous week.

For the European major indexes, it was a mixed week. The DAX30 and EuroStoxx600 rose by 0.58% and by 0.50% respectively, while the CAC40 slipped by 0.17%.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar, with monetary policy divergence splitting the two.

In the week ending 17th April, the Aussie Dollar rose by 0.27% to $0.6366, while the Kiwi Dollar fell by 0.69% to $0.6035.

Support for riskier assets reversed losses for the Aussie on Friday and limited the downside for the Kiwi.

For the Aussie Dollar

It was a relatively busy week for the Aussie Dollar on the economic data front.

Economic data included March and April business and consumer confidence figures and March employment numbers.

The stats were skewed to the negative, with the business and consumer confidence in decline.

Employment numbers for March were better than anticipated, though this was more of a timing issue. April figures are expected to reflect the economic effects of COVID-19.

Outside of the numbers, falling commodity prices also pinned back the Aussie Dollar.

For the Kiwi Dollar

It was a particularly quiet week on the economic calendar. There were no material stats from New Zealand to provide the Kiwi with direction.

The lack of stats left the Kiwi in the hands of market risk sentiment and the outlook towards monetary policy.

While the RBA is expected to stand pat on rates, the RBNZ has spoken of more support and even negative rates down the track.

A 1.12% rally on Friday, driven by demand for riskier assets, reversed most of the week’s losses.

For the Loonie

It was a relatively quiet week on the economic calendar.

On the data front, February manufacturing sales figures had a muted impact, in spite of a 0.5% rise.

Earlier in the week, however, the Bank of Canada did provide some support, with a rate hold on Wednesday.

After having delivered 2 emergency moves in response to the impact of the global lockdown, the BoC revealed no plans for further rate cuts.

With the BoC on hold, whilst ramping up its T-Bill purchases, risk sentiment also the Loonie in the week.

Crude oil prices weighed, however, with WTI ending the week at sub-$19 per barrel levels.

The Loonie fell by 0.32% to end the week at C$1.4001. A 0.58% rally on Friday limiting the loss for the week, as demand for riskier assets surged on the day.

For the Japanese Yen

It was a quiet week on the data front. Economic data was limited to finalized industrial production numbers for February.

The stats had a muted impact on the Yen, in spite of a downward revision to production.

Market expectations are for the Yen to continue to strengthen against the Dollar, as lockdown measures ease.

A downward trend in the number of new coronavirus cases also provided support to the Yen.

The Japanese Yen rose by 0.86% to end the week at ¥107.54. In the week prior, the Yen had risen by just 0.07% against the U.S Dollar.

Out of China

It was a busy week on the economic data front.

In the 1st half of the week, March trade data came in better than had been forecasted.

China’s U.S Dollar trade balance rebounded from a US$7.09bn deficit to a US$19.9bn surplus. Both imports and exports saw significantly lower declines than had been reported in February.

At the end of the week, 1st quarter GDP figures along with March retail sales and industrial production figures were in focus.

Market resilience passed the test once more, with quite dire numbers failing to weigh on risk appetite on Friday.

Quarter-on-quarter, the economy contracted by 9.8%, with the economy contracting by 6.8% year-on-year.

In March, retail sales slumped by 15.8%, with industrial production falling by a further 1.1%.

With updates on the coronavirus and talks of easing lockdown measures, the markets brushed aside the dire numbers on Friday.

In the week ending 10th April, the Yuan fell by 0.54% to CNY7.0737 against the Greenback.

The CSI300 rose by 1.87%, with the Hang Seng ending the week up by just 0.33%.

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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