The Weekly Wrap – U.S Politics, Stats, and COVID-19 Vaccine News were Key Drivers

The Stats

It was a particularly busy week on the economic calendar, in the week ending 8^th January.

A total of 61 stats were monitored, following 15 stats from the week prior.

Of the 61 stats, 23 came in ahead forecasts, with 33 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 20 of the stats reflected an upward trend from previous figures. Of the remaining 41 stats, 34 reflected a deterioration from previous.

For the Greenback, it was a mixed week. After falling to a week low 89.209, the U.S Dollar Spot Index rebounded to end the week up by 0.18% to 90.098. The weekly gain marked a 3^rd gain in 8-weeks. In the week prior, the Dollar Spot Index had fallen by 0.32% to end the week at 89.937.

In the week, the Democrats won the Senate race, delivering expectations of substantial fiscal support. Optimism towards the economic outlook was also fueled by COVID-19 vaccine news.

Out of the U.S

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

Private sector PMI and labor market numbers were the key drivers in the week.

In December, the ISM Manufacturing PMI rose from 57.6 to 60.7, with the Services PMI climbing from 55.9 to 57.2.

A 123k fall in nonfarm payrolls in December, according to the ADP failed to spook the markets ahead of the official government figures.

In the week ending 1^st January, initial jobless claims slipped from 790k to 787k.

At the end of the week, nonfarm payrolls fell by 140K in December, partially reversing a 336k increase in November.

In spite of the fall, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

In the equity markets, the S&P500 and Dow rose by 1.61% and by 1.83% respectively. The NASDAQ led the way, however, rallying by 2.43%.

Out of the UK

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

Finalized manufacturing and service sector PMI and Construction PMI figures for December were in focus.

The stats were skewed to the negative, with services PMI, composite PMI, and construction PMI coming up short of expectations.

An upward revision to December’s manufacturing PMI was brushed aside, with service sector activity key.

At the end of the week, December house price figures numbers had a muted impact.

With stats skewed to the negative, a reintroduction of lockdown measures added further pressure on the Pound in the week.

Ongoing vaccinations, following the approval of the AstraZeneca vaccine limited the downside, however.

In the week, the Pound fell by 0.76% to $1.3568. In the week prior, the Pound had risen by 0.85% to $1.3672.

The FTSE100 ended the week up by 6.39%, reversing a 0.64% loss from the previous week.

Out of the Eurozone

It was a particularly busy week on the economic data front.

Private sector PMI figures for Italy and Spain and finalized figures for France, Germany, and Italy were in focus.

From Germany, retail sales, unemployment, factory orders, industrial production, and trade figures also influenced.

French consumer spending numbers also drew interest at the end of the week.

Eurozone unemployment, retail sales, trade data, and inflation figures had a muted impact on the EUR and European majors, however.

It was a mixed bag on the economic data front.

Manufacturing sector activity picked up in December, supported by another sharp increase in new orders.

Service sector conditions improved, though not enough for the sector to return to expansion.

Economic data from Germany was also impressive.

Retail sales saw an unexpected rise in November, with unemployment seeing a surprise fall to leave the unemployment rate at 6.1%.

Factory orders and industrial production also saw further upside in November, while trade data disappointed. In November, Germany’s trade surplus narrowed from €18.2bn to €16.4bn.

French consumer spending also disappointed, with lockdown measures in November weighing. Spending tumbled by 18.9% in November, reversing a 3.9% rise from October.

While economic data from Germany impressed, an extension to lockdown measures in Germany limited the impact of dated numbers.

France was also considering a reintroduction of lockdown measures, adding further pressure on the EUR.

Approval of the Moderna Inc. vaccine, however, limited the impact of planned containment measures in the week.

For the week, the EUR rose by 0.02% to $1.2218. In the week prior, the EUR had risen by 0.18% to $1.2215.

For the European major indexes, it was another bullish week. The EuroStoxx600 rallied by 3.04%, with the CAC40 and DAX30 gaining 2.80% and 2.41% respectively.

U.S politics and vaccine approvals contributed to the upside for the majors in the week.

For the Loonie

It was a relatively busy week on the economic data front. November trade and December Unemployment figures were key stats in the week.

In November, the trade deficit narrowed from C$3.73bn to C$3.34bn.

Employment figures were skewed to the negative, however, with employment falling by 62.6K. As a result of the decline, Canada’s unemployment rate ticked up by 8.5% to 8.6%.

Other stats in the week included RMPI and Ivey PMI numbers that had a muted impact in the week.

Supporting the upside for the Loonie, however, was a jump in crude oil prices and hopes of more U.S stimulus.

In the week ending 8^th January, the Loonie rose by 0.20% to C$1.2702. In the week prior, the Loonie had risen by 1.06% to C$1.2728.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, following solid gains from the previous week.

In the week ending 8^th January the Aussie Dollar rose by 0.82% to $0.7757 with the Kiwi Dollar ending the week up by 0.75% to $0.7242.

For the Aussie Dollar

It was a quiet week on the economic calendar.

November building approvals and trade data were in focus in the week.

It was a mixed bag on the economic data front, however. While building approvals were on the rise, Australia’s trade surplus narrowed from A$7.456bn to A$5.022bn.

In spite of the narrowing, the Aussie Dollar found strong support on optimism towards the economic outlook.

Expectations of more U.S stimulus and the ongoing COVID-19 vaccinations delivered support for riskier assets.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of COVID-19 news and U.S politics in the week.

For the Japanese Yen

It was a relatively busy week on the economic calendar. Finalized privates sector PMI figures for December were in focus, along with November household spending data.

The stats were mixed. While the manufacturing and service sector PMIs saw upward revisions, household spending disappointed.

In November, household spending slid by 1.8%, reversing a 2.1% rise from October.

A jump in new COVID-19 cases in Japan added to the negative sentiment in the week.

The Japanese Yen fell by 0.72 % to ¥103.94 against the U.S Dollar. In the week prior, the Yen had risen by 0.22% to ¥103.20.

Out of China

Private sector PMIs for December were in focus in the first half of the week, with the stats skewed to the negative.

In December, the Caixin Manufacturing PMI fell from 54.9 to 53.0, with the services PMI falling from 57.8 to 56.3

While the stats were on the weaker side, the private sector continued to expand at a solid pace.

On the negative, however, was news of U.S plans to delist Chinese entities from the NYSE.

In the week,  the Chinese Yuan rose by 0.81% to CNY6.4746. In the week prior, the Yuan had risen by 0.22% to CNY6.5272.

The CSI300 rallied by 5.45%, with the Hang Seng ended the week up by 2.38%.