It was a relatively busy week on the economic calendar, in the week ending 27th August.
A total of 49 stats were monitored, which was down from 52 stats in the week prior.
Of the 49 stats, 17 came in ahead forecasts, with 28 economic indicators coming up short of forecasts. There were 4 stats that were in line with forecasts in the week.
Looking at the numbers, 17 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 31 reflected a deterioration from previous.
For the Greenback, FED monetary policy and economic data delivered Dollar weakness. In the week ending 27th August, the Dollar Spot Index fell by 0.87% to 92.686. In the previous week, the Dollar had risen by 1.02% to 93.549.
Out of the U.S
Early in the week, private sector PMIs were in focus. Weaker numbers weighed, with the Services PMI falling from 59.9 to 55.2 in August, according to prelim figures.
On Wednesday, core durable goods rose by 0.7% in July, following a 0.6% increase in June, which was a positive.
2nd quarter GDP numbers were also revised up on Thursday. In the 2nd quarter, the economy grew by 6.6%, which was up from a 6.5% first estimate.
Jobless claims disappointed, however, with initial jobless claims rising from 349k to 353k.
At the end of the week, personal spending and inflation figures delivered mixed results.
In July, the Core PCE Price Index rose by 3.6% year-on-year, which was in line with forecasts and June figures. Month-on-month, the index rose by 0.3% following a 0.5% increase in June.
Personal spending disappointed, however, with spending up by just 0.3%. Spending had risen by 1.1% in June.
While the stats did influence, FED Chair Powell’s speech on Friday was the main event of the week…
The FED Chair Powell delivered what the markets were looking for, weighing on the Dollar while supporting riskier assets. In line with expectations, Powell talked of tapering later in the year but highlighted that tapering did not mean tightening and that it would not translate into a shift in policy on interest rates…
Out of the UK
Economic data was on the lighter side. Prelim private sector PMIs for August disappointed at the start of the week.
The all-important services PMI fell from 59.6 to 55.5, with the manufacturing PMI down from 60.4 to 60.1.
CBI industrial trend orders for August were of little comfort, in spite of an increase from 17 to 18.
In the week, the Pound rose by 1.04% to end the week at $1.3764. In the week prior, the Pound had fallen by 1.75% to $1.3623.
The FTSE100 ended the week up by 0.85%, partially reversing a 1.81% loss from the previous week.
Out of the Eurozone
Prelim private sector PMIs for August and the German economy were in focus, with the stats skewed to the negative.
Germany’s manufacturing PMI fell from 65.9 to 62.7, with the services PMI declining from 61.8 to 61.5.
For France, the manufacturing PMI fell from 58.0 to 57.3, with the services PMI falling from 56.8 to 56.4.
As a result, the Eurozone’s manufacturing PMI fell from 62.8 to 61.5. The services PMI slipped from 59.8 to 59.7.
From Germany, the economy grew by 1.6% in the 2nd quarter, coming in ahead of a forecasted 1.5%. Year-on-year, the economy grew by 9.8%. Year-on-year, the economy had contracted by 3.4% in the previous quarter.
While the GDP numbers were upbeat, business and consumer sentiment disappointed.
Germany’s IFO Business Climate Index fell from 100.7 to 99.4, with the GfK Consumer Climate Indicator falling from -0.40 to -1.20.
For the week, the EUR rose by 0.83% to $1.1795. In the week prior, the EUR had fallen by 0.84% to $1.1698.
The CAC40 rose by 0.84%, with the DAX30 and the EuroStoxx600 ending the week with gains of 0.28% and 0.76% respectively.
For the Loonie
It was a quiet week on the economic data front, with RMPI numbers for July the key stat of the week.
In July, the RMPI, increased by 2.2%, month-on-month. The RMPI had risen by 3.90% in June.
Adding to the upside for the Loonie in the week was a sharp rebound in crude oil prices. FED Chair Powell’s outlook also put monetary policy divergence in favor of the Loonie.
In the week ending 27th August, the Loonie rose by 1.57% to C$1.2620. In the week prior, the Loonie had fallen by 2.45% to C$1.2821.
The Aussie Dollar rallied by 2.52% to $0.0.7312, with the Kiwi Dollar ending the week up by 2.57% to $0.7011.
For the Aussie Dollar
Private new capex and retail sales figures were the key stats of the week.
In the 2nd quarter, private new CAPEX rose by 4.4% following a 6.0% increase in the previous quarter.
On the negative, however, was a 2.7% slide in retail sales in July. In June, retail sales had fallen by 1.8%. COVID-19 lockdown measures weighed on consumption in July, limiting the impact on the Aussie Dollar.
For the Kiwi Dollar
It was a relatively busy week, with retail sales and trade data in focus.
Retail sales figures for the 2nd quarter impressed, with retail sales up 3.2% and core retail sales up 3.4%. In the previous quarter, retail sales had been up 2.8%, with core retail sales up 3.2%.
On the negative, however, were trade figures for July. Month-on-month, the trade balance fell from a NZ$245m surplus to a NZ$402m deficit.
Year-on-year, the deficit widened from NZ$280m to NZ$1,100m. While the headline figure was negative, a more marked increase in imports, supported by strong demand, impacted the trade balances.
For the Japanese Yen
It was a relatively quiet week.
Private sector PMIs and Tokyo inflation figures were in focus.
PMI numbers disappointed, with the services PMI falling from 47.4 to 43.5. The manufacturing PMI saw a more modest decline from 53.0 to 52.4.
On the inflation front, Tokyo core consumer prices remained unchanged in August, year-on-year. In July, core consumer prices had fallen by 0.5%. The numbers had a muted impact on the Yen, however.
The Japanese Yen fell by 0.05% to ¥109.84 against the U.S Dollar. In the week prior, the Yen had fallen by 0.17% to ¥109.78.
Out of China
There were no major stats from China to influence the markets in the week.
In the week ending 27th August, the Chinese Yuan rose by 0.45% to CNY6.4720. In the week prior, the Yuan had ended the week down by 0.37% to CNY6.5015.
The CSI300 and the Hang Seng ended the week up by 1.21% and by 2.25% respectively.