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Bob Mason
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The Stats

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

A total of 67 stats were monitored through the week, following 53 stats from the week prior.

Of the 67 stats, 21 came in ahead forecasts, with 30 economic indicators coming up short of forecast.  16 were in line with forecasts in the week.

Looking at the numbers, 23 of the stats reflected an upward trend from previous figures. Of the remaining 44, 29 stats reflected a deterioration from previous.

For the Greenback, it was a positive week. Market sentiment towards the phase 1 trade agreement and economic data out of the U.S provided support. The Dollar Spot Index ended the week up by 0.26% to 97.606.


Out of the U.S           

It was a quiet start to the week for the Dollar, with the stats skewed to the negative.

The markets had to wait until Tuesday for December inflation figures that failed to impress. Consumer prices rose by just 0.2%, falling short of a forecasted 0.3% rise. In November consumer prices had risen by 0.3%.

The annual rate of core inflation held steady at 2.3%, however, which was in line with forecasts.

Wholesale inflation numbers were also Dollar negative, while there was a pickup in wholesale inflation at the end of the year.

Positive for the Dollar on the day, however, was a rise in the NY Empire State Manufacturing Index in January.

The market focus then shifted to a busy Thursday.

Retail sales and the Philly FED manufacturing were positives for the Dollar.

On Friday, another busy day on the U.S calendar saw housing sector numbers, industrial production, consumer sentiment, and November’s JOLTs job openings provide direction.

While the stats were skewed to the negative, consumer confidence and sentiment figures were only down marginally from November. Within the reports, inflation expectations for 1-year, 5-year, and 10-year horizons were on the rise which was positive, supporting the strong consumer demand outlook.

A negative end to the week had little impact on the Dollar, which rose by 0.29% on the day.

On the geopolitical front, the phase 1 trade agreement was signed on Wednesday. As details trickled through mid-week, the agreement is certainly skewed in favor of the U.S.

In the equity markets, the Dow rose up by 1.82%, with the S&P500 and NASDAQ up by 1.97% and by 2.29% respectively.

Out of the UK

It was a particularly busy week on the economic calendar.

On Monday, economic data was heavily skewed to the negative, supporting the rising prospects of a rate cut later this month.

Figures on Monday showed that the UK economy contracted in November. Year-on-year, the economy grew at the slowest pace in 7-years, raising yet more red flags.

Industrial and manufacturing production also weighed on the Pound at the start of the week, suggesting further economic weakness ahead.

A narrowing in the UK trade deficit did little to calm the markets.

Focus then shifted to December inflation figures on Wednesday, which also disappointed. The annual rate of inflation eased from 1.5% to 1.3%, with producer input prices rising by just 0.1%. Economists had forecast a 0.3% increase.

Wrapping up a dire week for the Pound were retail sales figures for December. The Pound hit reverse, falling from a Friday week high $1.3119 to $1.3020 levels.

While the numbers were dire and expectations of a rate cut were on the rise, it’s Boris Johnson and the Tories that managed to prop up the Pound in the week.

Greater clarity on what lies ahead and a sizeable Tory Party majority clear a significant amount of political uncertainty that has weighed on the Pound.

The Pound ended the week down by 0.37% to $1.3016, with a 0.49% slide on Friday doing the damage.

The FTSE100 was rose by 1.14%, supported by the weaker Pound and sentiment towards trade.

Out of the Eurozone

It was a relatively quiet week on the economic data front.

The markets had to wait until Wednesday for key stats that included industrial production and trade figures from the Eurozone.

Neither impressed, with industrial production rising by just 0.2% following a 0.9% slide in October. Economists had forecast a 0.3% rise. The trade surplus also weighed, narrowing from EUR28.0bn to EUR20.7bn. Forecasts were for a surplus of EUR23.3bn.

On the inflation front, finalized numbers out of France, Germany, Italy, Spain, and the Eurozone had a muted impact on the day.

With the annual rate of core inflation sitting at 1.3% and economic indicators flashing red, the ECB is unlikely to become less accommodative any time soon.

For the week, the EUR fell by 0.26% to $1.1092, with a 0.4% slide on Friday sending the EUR into the red.

For the European major indexes, it was a bullish week. The CAC40 and EuroStoxx600 rose by 1.02% and by 1.29% respectively, with the DAX gaining 0.32%.


It was a relatively bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 0.32% to $0.6879, with the Kiwi Dollar down by 0.24% to $0.6615.

For the Aussie Dollar

It was a particularly quiet week for the Aussie Dollar, with no material stats to rock the boat. The lack of stats left the Aussie in the hands of market sentiment towards trade and the bush fires that continue to plague parts of the country.

With the fires raging on, the chances of a rate cut have spiked in recent days, leading the Aussie Dollar back to sub-$0.69 levels.

For the Kiwi Dollar

It was a relatively busy week on the economic colander.

Business confidence and building consent figures were in focus on Tuesday. The numbers were mixed, with confidence improving, while consents slumped in November.

The rest of the stats were skewed to the negative in the 2nd half of the week.

Electronic sales fell by 0.8% in December, following a 2.6% jump in November.

Adding to the Kiwi Dollar’s woes was a contraction in the manufacturing PMI in December. The PMI fell from 51.4 to 49.3.

While the numbers were skewed to the negative, expectations are for the RBNZ to stand pat on policy for now. This would mean that interest rate differentials will widen further in favor of the Kiwi Dollar, assuming the RBA makes a move.

For the Loonie

It was a particularly quiet week for the Loonie.

There were no material stats to provide direction, leaving the Loonie in Limbo.

The Bank of Canada’s Business Outlook Survey on Monday did little to drive support. This was in spite of the BoC seeing business confidence improve. Weakness reported across the Prairies was a concern, however.

The good news was that, outside of the energy-producing regions, there was an uptick in future sales, with foreign demand on the rise. The USMCA should deliver further demand from the U.S, which was also on the rise.

From elsewhere, crude oil failed to support, with easing tension between the U.S and Iran pinning back any major upside stemming from the phase 1 trade agreement.

The Loonie fell by 0.12% to C$1.3066 against the Greenback in the week, with a 0.18% slide on Friday doing the damage.

For the Japanese Yen

There were no material stats to provide direction to the Yen. The lack of stats from Japan left the Yen in the hands of market risk appetite, which was Yen negative.

Adding pressure on the Yen was some dovish chatter from the BoJ Governor Kuroda. The BoJ Governor assured the markets that the BoJ would make a move should the need arise.

The Japanese Yen fell by 0.63% to ¥110.14 against the U.S Dollar.

Out of China

Economic data was on the busier side. Key stats included December trade figures on Tuesday and a particularly busy end of the week.

On the trade front, China’s Dollar trade surplus widened from $37.93bn to $46.79bn in December.

While the numbers were positive, with exports and imports surging by 7.6% and by 16.3% respectively, the jump in demand was likely to be due to Chinese New Year.

On Friday, the numbers were also skewed to the positive, in spite of China’s economy seeing the slowest growth in 29-years.

Retail sales, industrial production, and fixed asset investments all came in ahead of forecasts.

On the economic growth front, there was no quarterly slowdown from the 3rd quarter. Growth for was the slowed in 29-years, however. Looking at the quarterly GDP numbers, the PBoC and Beijing appear to have managed to offset the effects of punitive tariffs in the 4th quarter.

On the geopolitical front, China signed the phase 1 trade agreement, committing to some sizable imports from the U.S.

While this is good news near-term, remaining tariffs could muddy the waters down the road.

At the end of the week, the U.S administration did talk of remaining tariffs being rolled off in stages. Much will depend upon compliance with the agreement, however.

The CSI300 ended the week down by 0.20%.

The Yuan gained 0.86% to end the week at CNY6.8598 against the Greenback. The weekly gain came as the U.S administration removed China from its list of current manipulators ahead of Wednesday’s signing of the trade agreement.

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