Weekly Wrap – Stats, Trade and Geopolitics and the Dollar ComebackIt was a week for the Dollar bulls, with retail sales figures delivering the final blow on Friday. Plenty of risks remain, however…
It was a relatively busy week on the economic calendar in the week ending 14th June,
A total of 63 stats were monitored throughout the week.
Of the 63 stats, 32 came in below forecasts, with just 19 economic indicators coming in ahead of forecast. 11 stats were in line with forecasts in the week.
Looking at the numbers, 35 of the stats reflected a deterioration from previous figures. Of the remaining 28, 20 stats reflected an upward trend.
While the economic data was skewed to the negative, the U.S Dollar Index (“DXY”) managed to partially reverse the previous week’s 1.23% slide with a 0.58% rise to 97.572.
For the EUR, it was a reversal of last week, with the EUR seeing red in 4 of the 5 days.
Out of the U.S,
On the data front, key stats were skewed to the negative again in the week.
On the positive front, April’s JOLTs job openings came in ahead of forecast on Monday. While positive, there were fewer job openings when compared with March.
The markets then had to wait until Friday for the next set of positive numbers.
While industrial production rose by 0.4%, reversing a 0.4% decline in April, it was May retail sales figures that took the limelight.
Core retail sales rose by 0.5%, month-on-month, which was in line with forecast, with an upward revision to April sales also positive.
Retail sales also increased by 0.5% in May, while falling short of a forecasted 0.6% increase. Once again, the positive was an upward revision to a 0.3% increase in April.
It was negative for the rest of the stats, consumer sentiment deteriorated, according to prelim June figures.
May inflation figures released on Wednesday also failed to impress, with the annual rate of baseline inflation easing from 2.1% to 2.0%.
Following the dire nonfarm payroll numbers, the inflation figures added to the prospects of a FED near-term rate hike. The retail sales figures, however, may have clouded the outlook.
Outside of the stats, market sentiment towards the U.S – China trade war and rising tension in the Gulf was also a factor.
In the equity markets, the U.S majors rose for a 2nd consecutive week, though the gains were modest. The NASDAQ led the way, rising by 0.7%. The S&P500 and Dow rose by 0.47% and by 0.41% respectively.
Out of the UK,
It was a particularly busy week on the economic data front.
April trade data, industrial production, manufacturing production, GDP numbers provided direction on Monday.
Barring a narrowing in the trade deficit, the stats were skewed to the negative.
Manufacturing production slumped by 3.9% in the month, leading to a 2.7% fall in industrial production.
GDP numbers also came in softer. The economy contracted by 0.4% in April, following a 0.1% contraction the previous month. Year-on-year, the economy grew by 1.3%, slowing from 1.8% in March.
On Tuesday, the stats were also skewed to the negative. Wage growth slowed from 3.3% to 3.1%, with claimant counts rising by 23.2K.
The unemployment rate held steady at 3.8%, however, providing much-needed support.
Outside of the numbers, the Conservative Party leadership race was also in focus through the week.
Brexiteer Boris Johnson remained clear favorite at the end of the week. In the first of the ballots on Thursday, Johnson took 114 of the votes, well ahead of Jeremy Hunt’s 2nd placed 43 votes.
The Pound showed little reaction to the results, however, with next week’s ballots being the true test…
Reversing the previous week’s 0.86% gain, the Pound slid by 1.16% to end the week at $1.2589. The Pound last closed out at $1.25 levels back in December of last year.
For the FTSE100, the weaker Pound was of little support for the 100. The Index rose by just 0.19% following the previous week’s 2.38% rally.
Disappointing data out of China on Friday contributed to a 0.31% fall on the day to limit the upside for the 100.
Out of the Eurozone,
It was a relatively quiet week.
Finalized May inflation numbers out of Spain, Germany, France, and Italy had little impact through the week. Barring an unexpected upward revision to French inflation figures, softer inflation affirmed the ECB’s dovish outlook to pin EUR back in the week.
French nonfarm payrolls failed to support the EUR on Wednesday, in spite of a better than forecast 0.4% rise in the 1st quarter.
Eurozone industrial production was also disappointing. Production fell by 0.5%, following on from a 0.3% decline in April. Germany’s production figures were amongst the worst of the region in the month.
Outside of the numbers, Draghi continued to warn of the negative effects of the ongoing U.S – China trade war to add to the EUR’s woes.
The EUR slid by 1.11% in the week, with a 0.6% slide on Friday delivering a heavy blow.
In the equity markets, the weaker EUR failed to spur the majors into action. The CAC40 gained just 0.07%, with the DAX30 ending the week up by 0.42%.
It was a particularly bearish week for the Aussie and Kiwi Dollars.
The Aussie Dollar tumbled by 1.84% to $0.6872, while the Kiwi Dollar slumped by 2.6% to $0.6492.
For the Aussie Dollar,
Economic data failed to provide support in the week.
Business confidence improved in May, according to the NAB monthly survey, with employment also getting a boost in May. The unemployment rate held steady at 5.2% in spite of an increase in the participation rate.
From elsewhere, economic data out of China delivered mixed results.
A bullish U.S Dollar added to the Aussie Dollar’s demise, in spite of softer inflation numbers. Friday’s U.S retail sales figures and continued concern over the impact of the U.S – China trade war weighed.
For the Kiwi Dollar,
Electronic card retail sales and business PMI numbers were red flags in the week. Retail electronic card sales fell by 0.5%, with the manufacturing sector stagnating in May.
Coupled with weak stats out of China and concerns over trade, it was downhill all the way. The Kiwi Dollar saw red for 5-consecutive days.
For the Loonie,
Economic data was limited to housing sector figures, which had a muted impact on the Loonie.
A slide in crude oil prices on the week and concerns over the global economic outlook contributed to a 1.11% fall to C$1.3414 against the Greenback.
For the Japanese Yen,
It was a relatively busy week for the Japanese Yen.
1st quarter GDP numbers on Monday came in ahead of prelim figures. While the better growth figures were positive, concerns over the effect of the U.S – China trade war on demand weighed.
Also positive, was a rise in the Tertiary Industry Activity Index and a confirmed increase in industrial production.
On the downside, the BSI Large Manufacturing Conditions Index raised a red flag for the 2nd quarter.
For the week, the Japanese Yen fell by 0.34% to ¥108.56 against the Dollar, reversing a 0.09% gain from the previous week.
Out of China,
It was a busy week on the economic calendar.
China’s U.S Dollar trade surplus widened from $13.84bn to $41.65bn in May. Imports jumped by 8.5%, while exports rose by 1.1%.
While the trade figures were positive, inflation numbers, fixed asset investment, and industrial production disappointed.
The highlight of the week was a bounce back in retail sales, though it was not enough to shift risk appetite.
In spite of a 0.83% slide on Friday, the CSI300 ended the week up 2.53%, supported by fiscal support from the Chinese government.