The Weekly Wrap – A Hawkish FED Sends the Dollar Spot Index Towards 100

The Stats

It was a quiet week on the economic calendar for the week ending April-08, 2022.

A total of 33 stats were monitored, following 64 stats in the week prior.

Of the 33 stats, 16 beat forecasts, with 14 economic indicators coming up short of forecast. 3 stats were in line with forecasts.

Looking at the numbers, 20 of the stats reflected an upward trend from previous figures. Of the remaining 13 stats, 12 stats were weaker.

Hawkish FOMC member chatter drove Dollar demand ahead of more hawkish than expected FOMC meeting minutes.

Out of the U.S

In the first half of the week, the market focus was on factory orders and service sector PMIs.

The stats were mixed. Factory orders fell by 0.5% in February, partially reversing a 1.5% rise from January, while service sector activity improved.

In March, the market’s preferred ISM Non-Manufacturing PMI increased from 56.5 to 58.3.

On Thursday, jobless claims were also impressive. In the week ending April-01, initial jobless claims fell from 171k to 166k.

With the stats dollar positive, the FOMC meeting minutes were also greenback positive mid-week. More hawkish than anticipated minutes drove demand for the greenback. The minutes revealed plans to begin cutting the FED balance sheet by $95bn per month amidst a rising interest rate environment to curb inflation.

In the week ending April 8, 2022, the Dollar Spot Index rose by 1.18% to end the week at 99.796. In the week prior, the Index fell by 0.16% to 98.632.

Out of the UK

Private sector PMIs were Pound positive.

In March, the services PMI increased from 60.5 to 62.6, up from a prelim 61.0. As a result, the composite PMI rose from 59.9 to 60.9, up from a prelim 59.7.

The construction PMI held steady at 59.1 in March. Economists had forecast a fall to 57.8.

In the week, the Pound fell by 0.68% to end the week at $1.3025. In the week prior, the Pound fell by 0.52% to $1.3114.

The FTSE100 ended the week up 1.73%, following a 1.06% gain from the previous week.

Out of the Eurozone

It was a busy week, with the markets focused on service sector activity and the German economy.

Stats from Germany delivered mixed results. In February, Germany’s trade surplus widened from €8.9bn to €11.5bn, with industrial production up 0.2%. Factory orders slid by 2.2%, however, to test EUR support.

Service sector PMIs were more upbeat. France and Germany saw service sector activity pickup, while Italy and Spain saw activity moderate. Despite this, the Eurozone’s services PMI rose from 55.5 to 55.6. As a result of disappointing manufacturing numbers, the Eurozone’s composite PMI fell from 55.5 to 54.9.

On Thursday, the ECB monetary policy meeting minutes also drew interest.

In line with expectations, policymakers discussed cutting back on stimulus to curb inflation. Policymakers noted that “three forward guidance conditions for an upward adjustment of the key ECB interest rate had either already been met or were very close to being met.”

Despite the need to curb inflation, the war in Ukraine left policymakers on a more cautious footing.

For the week, the EUR slid by 1.50% to $1.0877. In the previous week, the EUR rose by 0.55% to $1.1043.

The EuroStoxx600 rose by 0.57%, while the CAC40 and the DAX ended the week with losses of 2.04% and 1.13%, respectively.

For the Loonie

Trade, Ivey PMI, and employment figures were the key stats of the week.

It was a mixed bag for the Loonie, with Canada’s trade surplus widening from C$2.62bn to $2.66bn. Ivey PMI numbers also impressed, rising from 60.6 to 74.2.

Employment figures for March were disappointing. Employment rose by 72.5k following a 336.6k jump in the previous month. While the increase was modest, the unemployment rate fell from 5.5% to 5.3%.

From the Bank of Canada, the BoC Business Outlook Survey reflected concern amongst businesses about inflation. Around 35% of firms expected inflation to overshoot the BoC’s 2% target for 2-3 years, up from 31% of businesses in the fourth quarter.

In the week ending April-08, the Loonie fell by 0.40 to C$1.2572 against the Greenback. In the week prior, the Loonie declined by 0.36% to C$1.2522.

Elsewhere

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

The Aussie Dollar slipped by 0.51% to $0.7458, with the Kiwi Dollar sliding 1.13% to end the week at $0.6849.

For the Aussie Dollar

Economic data was limited to trade data, which was disappointing. In February, Australia’s trade surplus narrowed from A$12.891bn to A$7.457bn.

With stats on the lighter side, the RBA monetary policy decision and forward guidance failed to provide support.

The lack of support came despite the RBA taking a more hawkish stance on cash rates. Rising house prices may force the RBA to lift interest rates more slowly than the FED.

For the Kiwi Dollar

There were no material stats for the markets to consider, leaving the Kiwi Dollar on the defensive. Monetary policy divergence and weak private sector PMI numbers from China weighed.

For the Japanese Yen

Household spending figures provided little support to the Yen, with spending sliding by a further 2.8% in February. In January, spending fell by 1.2%.

The Japanese Yen slumped by 1.49% to end the week at ¥124.34 against the Dollar. In the week prior, the Yen ended the week down by 0.39% to ¥122.52.

Out of China

It was a quiet week on the economic data front, with stats limited to service sector PMI numbers.

Following disappointing manufacturing data, service sector data also painted a grim picture as China grapples with the latest COVID-19 breakout.

In March, the services PMI fell from 50.2 to 42.0.

In the week ending April-08, the Chinese Yuan fell by 0.03% to CNY6.3650. Through the week prior, the Yuan ended the week rose by 0.05% to CNY6.3629.

The Hang Seng Index ended the week down 0.76%, with the CSI300 falling by 1.06%.

European Equities: A Week in Review – 08/04/22

The Majors

It was a mixed week for the European majors in the week ending April-8, 2022.

The EuroStoxx600 rose by 0.57%, while the CAC40 and the DAX ended the week with losses of 2.04% and 1.13%, respectively.

Market angst over FED monetary policy and the ongoing Russian invasion of Ukraine weighed on demand for riskier assets.

Economic data from the Eurozone delivered mixed results, which failed to offset market sentiment toward FED monetary policy.

News updates on China’s lockdowns to curb the spread of COVID-19 added to the negative sentiment in the week.

The Stats

It was a busy week, with the markets focused on service sector activity and the German economy.

Stats from Germany delivered mixed results. In February, Germany’s trade surplus widened from €8.9bn to €11.5bn, with industrial production up 0.2%. Factory orders slid by 2.2%, however, to test support.

Service sector PMIs were more upbeat. France and Germany saw service sector activity pickup, while Italy and Spain saw activity moderate. Despite this, the Eurozone’s services PMI rose from 55.5 to 55.6. As a result of disappointing manufacturing numbers, the Eurozone’s composite PMI fell from 55.5 to 54.9.

On Thursday, the ECB monetary policy meeting minutes also drew interest.

In line with expectations, policymakers discussed cutting back on stimulus to curb inflation. Policymakers noted that “three forward guidance conditions for an upward adjustment of the key ECB interest rate had either already been met or were very close to being met.”

Despite the need to curb inflation, the war in Ukraine left policymakers on a more cautious footing.

From the U.S

In the first half of the week, economic data included factory orders and service sector PMIs.

The stats were mixed. Factory orders fell by 0.5% in February, partially reversing a 1.5% rise from January, while service sector activity improved.

In March, the market’s preferred ISM Non-Manufacturing PMI increased from 56.5 to 58.3.

On Thursday, jobless claims were also impressive. In the week ending April-01, initial jobless claims fell from 171k to 166k.

While the stats were market positive, the FOMC meeting minutes weighed. More hawkish than anticipated minutes hit the global equity markets. The minutes revealed plans to begin cutting the FED balance sheet by $95bn per month amidst a rising interest rate environment to curb inflation.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen and BMW slid by 2.88% and 2.53%, respectively, with Continental falling by 2.24%. Daimler ended the week with a more modest 0.43% loss.

It was a mixed week for the banking sector. Deutsche Bank ended the week up 0.19%, while Commerzbank fell by 3.20%.

From the CAC, it was a bearish week for the banks. Credit Agricole and Soc Gen slumped by 9.43% and 10.41%, respectively. BNP Paribas slid by 7.43%.

Things were also bearish for the French auto sector. Stellantis NV and Renault ended the week down 6.92% and 9.26%, respectively.

Air France-KLM and Airbus saw losses of 3.27% and 6.86%, respectively.

On the VIX Index

A four-week losing streak ended for the VIX in the week ending April-08.

Reversing a 5.67% fall from the previous week, the VIX rose by 7.79% to end the week at 21.16.

2-days in the green from 5 sessions, which included a 13.25% jump on Tuesday, delivered the upside.

In the week, the NASDAQ 100 slid by 3.86%. The Dow and the S&P500 fell by 0.28% and 1.27%, respectively.

VIX 090422 Weekly Chart

The Week Ahead

It is a busy week ahead on the Eurozone economic calendar.

ZEW Economic Sentiment figures for Germany and the Eurozone are out on Tuesday. The markets will likely accept another deterioration in sentiment as Russia continues to bomb Ukraine.

On Wednesday, Eurozone industrial production figures will also draw attention.

The main event of the week, however, is the ECB monetary policy decision. A shift in stance on interest rates to curb inflation would test support for the majors.

Finalized inflation figures for member states are also due out. We don’t expect the numbers to materially influence the majors, however.

From the U.S, inflation figures are due out on Tuesday. Expect plenty of market sensitivity to the numbers following last week’s hawkish FOMC meeting minutes.

On Wednesday, wholesale inflation figures will also draw interest ahead of a busy end of the week.

With the markets closed on Friday, retail sales, consumer sentiment, and jobless claims will influence this Thursday. A slump in consumer spending, a rise in jobless claims, and a fall in consumer sentiment would be market risk negative.

Economic data from China will also provide direction, with inflation and trade data due out.

While the stats and monetary policy will provide direction, news updates on the war in Ukraine will remain the key driver.

European shares clock weekly gains; focus shifts to French elections

By Susan Mathew and Anisha Sircar

(Reuters) -European shares rallied on Friday to erase weekly losses, while investors focused on a tight race between far-right rival Marine Le Pen and incumbent Emmanuel Macron in the runup to the first round of French presidential elections over the weekend.

Financials and commodity stocks led the gains with all major sectors in positive territory. The pan-European STOXX 600 index added 1.3% and ended the week about 0.5% higher, with healthcare stocks firming the most on the week.

Topping the index was Banco BPM’s 10.2% surge, after French bank Credit Agricole said it has bought a 9.2% stake in Italy’s third-largest bank.

“European markets are mostly playing catch up with the U.S. from yesterday’s close,” said Julien Lafargue, chief market strategist at Barclays Private Bank, adding that investors are waiting to get a sense of what earnings could look like with big U.S. banks set to kick off next week. [.N]

“Traders have shrugged off the negative headlines about additional sanctions on Russia, as well as the chatter about higher interest rates from the Fed,” said David Madden, market analyst at Equiti Capital.

“But by and large, it was a negative week for equities as countries revealed plans to target Russia’s energy exports.”

The European Union formally adopted its fifth package of sanctions against Russia on Friday, including bans on the import of coal, wood, chemicals and other products.

Despite a 12% recovery from one-year lows hit in March, the STOXX 600 index is still down more than 6% this year on worries that surging inflation due to the Ukraine war will trigger central bank moves that could squeeze growth.

In Sunday’s first round of election in France, centre-left Macron is seen winning, but rival Marine Le Pen has surged in polls in recent weeks, leaving her victory within the margins of error. The two leading candidates from the vote will head to a run-off on April 24.

Barclay’s Lafargue said despite the polls, the turnout or lack thereof could swing the election.

France’s CAC 40 index rose 1.3%, but is down about 2% this week – the most among European peers – on election uncertainty.

Among other stocks, Atlantia’s rallied 8.7% after a report that top shareholder Edizione and Blackstone could launch a bid for the Italian infrastructure group at 24 euros per share around Easter.

Telecom Italia slipped 0.9% after it rejected a 10.8 billion euros ($11.8 billion) offer from KKR.

(Reporting by Susan Mathew and Anisha Sircar in Bengaluru; Editing by Krishna Chandra Eluri and Arun Koyyur)

French elections: Hedging for Macron’s exit

LONDON (Reuters) – Suddenly confronted with the possibility of far-right candidate Marine Le Pen winning this month’s French presidential elections against incumbent Emmanuel Macron, traders are scrambling to hedge portfolios against the risk of market turmoil.

A Le Pen victory, while still unlikely, is now within the margins of error before the first voting round on Sunday, opinion polls show. While she no longer advocates ditching the euro, markets are uneasy about her agenda of protectionism, tax cuts and nationalisation.

Berenberg analysts, who now assign a 30% chance to a Le Pen win versus 10% previously, said Le Pen would “throw sand in the gears of the EU. While she would not be able to roll back European integration, further progress would likely stall.”

Exit polls from the first polling round will emerge between 1800-2000 GMT. There will be a televised debate on April 20 and a second round on April 24.

This is how various assets could react and how traders are hedging against downsides.

EURO PAINS

A Le Pen win in the first round could send the euro, currently around $1.09, down to $1.05, but if she won the presidency and also the June legislative elections, the euro could fall below parity to the dollar, Nomura analysts warned.

They said demand for FX hedges was adding to pressure.

Derivative markets show that risk reversals — or the ratio of puts to calls — over the one-week period covering the first election round have flipped firmly in favour of puts or option contracts expecting more euro weakness.

Refinitiv data shows investors have bought put options on euro/dollar between $1.07-$1.08 levels in recent days and one trader said it is now 10% costlier than last week to buy a euro put against the dollar at $1.08.

Nomura recommends buying put spreads expiring in a month’s time as that covers both polling dates.

Euro implied volatility, a gauge of expected swings, has also pushed higher than broader FX gauges. One-week euro/dollar implied volatility is at a three-week high.

“The rise in the French election risk premium could weigh on the euro until the second round on 24 April,” said Samy Chaar, chief economist at Lombard Odier in Geneva.

EATING YOUR OATs

In bond markets, the spread between the yield of 10-year French and German government bonds — essentially the risk premium on French debt — has risen to 54 basis points, levels unseen since the 2020 market crash.

Spreads are well below levels seen at the height of the “Frexit” worries of 2017, but banks say clients have become more averse to French risk.

Mizuho rates strategist Peter McCallum noted spillover shorting activity rippling over from French bond futures into Italy. Many investors hedge bond exposure in the more liquid futures market.

Italian bonds actually underperformed French bonds during this week’s selloff, widening the spread between the two markets.

Open interest has risen while prices on both French and Italian bond futures have fallen. That is indicative of a build-up of short positions, said UBS strategist Rohan Khanna.

“I think there is appreciation of the fact that a Le Pen victory is an EU-level question,” Khanna said.

Italian bonds “become your principal instrument to short given all the fragilities in the Italian system.”

NATIONALISATION TARGETS FOR SALE

Societe Generale estimates a Le Pen win carries a maximum drawdown risk of 8% on French stocks. But they saw small- and mid-cap firms at greater risk than the internationally exposed CAC 40 Paris benchmark.

Broader European banks and Italian stocks, highly sensitive to EU integration, would also face extra downside, they added.

However, traders reported little equity hedging activity. The choice, instead, appears to be to sell bank stocks and holders of motorway concessions like Eiffage and Vinci, which may be targeted for nationalisation by Le Pen.

A chill has fallen over French dealmaking activity, according to one trader, who said, “none of my contacts has mentioned anything for weeks.”

(Reporting by Saikat Chatterjee, Yoruk Bahceli, Danilo Masoni and Susan Mathew; Editing by Sujata Rao and Bernadette Baum)

French markets wake up to risk of Le Pen presidency

By Julien Ponthus and Sudip Kar-Gupta

LONDON/PARIS (Reuters) -French stocks and bonds fell on Tuesday as markets started to acknowledge the risk of far-right candidate Marine Le Pen winning this month’s presidential elections against incumbent Emmanuel Macron.

France’s benchmark CAC-40 equity index was down 1.3% by 1215 GMT, underperforming the pan-European STOXX 600 index which was flat.

French government borrowing costs also surged, with yields on 10-year debt up 10 basis points.

The spread between the yield of 10-year French and German government bonds — essentially the premium demanded by investors to hold French debt — rose to 54 basis points, levels unseen since the COVID-19 market crash of 2020.

Le Pen, whose presidential campaign has gained momentum in recent days, on Monday captured 48.5% of voter intentions in an opinion poll of a likely runoff against Macron, the highest score she has ever notched.

The Harris Interactive poll for business magazine Challenges said a Macron victory – which pollsters had considered almost a foregone conclusion – was now within the margin of error.

“Markets woke up on Le Pen,” said Jerome Legras, head of research at Axiom Alternative Investments.

French banks Societe Generale, BNP Paribas and Credit Agricole took the biggest hits with losses of 4-6%, far more than the 1.3% fall on a broader European banking index.

One trader said the selloff was particularly notable in stocks seen vulnerable to a Le Pen election.

“Look at Vinci and Eiffage, their underperformance is a casualty of Le Pen risk”, the trader said, pointing to the far-right leader’s plans to nationalise French highway operators.

Shares in the two infrastructure groups fell around 5% on the day.

The turmoil rekindles memories of the 2017 election when fears of a far-left or far-right win sent French government borrowing costs soaring and pushed stocks sharply lower.

Many investors see Le Pen’s platform, which aims to keep the legal retirement age at 62 years, as generous in terms of public spending. She is also viewed as less business-friendly than Macron.

“Le Pen would likely be seen by markets as less reliable on public spending and economic competitiveness, and an unenthusiastic motor and/or unreliable partner for Germany and NATO at a crucial moment for Europe and the West,” NatWest economist Giovanni Zanni told clients last week.

FRENCH DEBT

Zanni reckons a surprise win for Le Pen could deliver a 50 basis points hit to French 10-year spreads over Germany — essentially the premium demanded by investors to hold French debt. That would take the spread to a similar level as Spain which has a lower credit rating.

In the run up to the 2017 election, spreads had blown out to nearly 80 bps.

Francois Raynaud, multi-asset fund manager at Edmond de Rothschild Asset Management, said selling French debt — known as OATs – versus the German Bund through 10-year futures was a good hedge against a surprise election result.

“By default, it seems judicious to us to take up protection by being underweight in terms of French weightings versus other indexes, or via the OAT futures,” Raynaud told Reuters on Monday, before the latest sell-off.

Many investors remain unfazed — Grace Peters, head of EMEA investment strategy at JP Morgan Private Bank, still favours French stocks, especially luxury and energy which are less vulnerable to the domestic economy.

“A Le Pen victory is the wild card out there which could be disruptive. But the base case is still for Mr Macron,” Peters said.

Others are scanning markets for risks.

The euro fell a quarter percent against the safe-haven Swiss franc on Tuesday to a one-month low but Adam Cole, a strategist at RBC Capital Markets, sees the euro’s risk premium as likely to rise in coming weeks.

“Might financial markets also be showing signs of complacency ahead of the polls? We think that is a significant risk,” he said.

(Reporting by Julien Ponthus and Samuel Indykin London, Sudip Kar-Gupta in Paris and Danilo Masoni in Milan; Editing by Sujata Rao and Ed Osmond)

The Week Ahead – Monetary Policy and Russia in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 34 stats due out through the week ending 08-April. In the week prior, 64 stats had been in focus.

For the Dollar:

Early in the week, ISM Non-Manufacturing PMI numbers for March will draw plenty of attention. A pickup in service sector activity would support a more aggressive interest rate path for the FED.

On Thursday, weekly jobless claims will also influence.

From the FED, the FOMC meeting minutes on Wednesday will be key. The markets will be wanting to get a sense of what is around the corner.

In the week ending April-01, the Dollar Spot Index fell by 0.16% to 98.632.

For the EUR:

The German economy will be in focus during the week. Trade data, factory orders, and industrial production figures for February will be key.

For member states and the Eurozone, service sector and composite PMIs for Spain, Italy, and the Eurozone will also need consideration.

On the monetary policy front, the ECB monetary policy meeting minutes on Thursday will also draw plenty of interest.

For the week, the EUR rose by 0.55% to $1.1043.

For the Pound:

Finalized service and composite PMIs for March are due out on Tuesday. Expect any revisions to the services PMI to be key.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak on Monday.

The Pound fell by 0.52% to end the week at $1.3114.

For the Loonie:

Trade data and Ivey PMIs will be in focus mid-week. On Friday, employment figures will be the key stats of the week, however.

From the BoC, the Business Outlook Survey will also need consideration at the start of the week.

The Loonie ended the week down 0.36% to C$1.2522 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

It’s a quiet week ahead, with key stats limited to finalized retail sales and trade data.

On the monetary policy front, the RBA is scheduled to deliver its policy decision on Tuesday. Expect forward guidance on the economic outlook and inflation to be key.

The Aussie Dollar slipped by 0.25% to $0.7496.

For the Kiwi Dollar:

Business confidence, due out on Tuesday, is the only stat for the markets to consider. We don’t expect a pickup in confidence to materially impact the Kiwi, however.

The Kiwi Dollar ended the week down 0.65% to $0.6927.

For the Japanese Yen:

It’s a quieter day ahead. Economic data is limited to household spending figures that should have a muted impact on the Yen. Market risk sentiment and monetary policy divergence will remain the key drivers.

The Japanese Yen fell by 0.39% to end the week at ¥122.52 against the U.S Dollar.

Out of China

It’s a quiet week ahead, with Caixin services PMI numbers for March the only numbers to consider.

Updates from China on COVID-19 and lockdown measures will need monitoring.

In the week ending April 01, the Yuan rose by 0.05% to end the week at 6.3629 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, with the markets looking for news of a ceasefire.

The Weekly Wrap – Russia, Economic Data, and China’s Lockdown Were in Focus

The Stats

It was a busier week on the economic calendar for the week ending April-01, 2022.

A total of 64 stats were monitored, following 43 stats in the week prior.

Of the 64 stats, 30 came in ahead of forecasts, with 29 economic indicators coming up short of forecast. 5 stats were in line with the forecast in the week.

Looking at the numbers, 31 of the stats reflected an upward trend from previous figures. Of the remaining 33 stats, 29 reflected a deterioration from previous numbers.

A shift in sentiment towards BoE and ECB monetary policy pegged back the Greenback, while U.S stats and Russia’s ongoing invasion of Ukraine continued to deliver Dollar support.

Out of the U.S

It was a busier week on the economic calendar. Early in the week, consumer confidence and JOLTs job openings drew interest. Consumer confidence improved in March, with JOLTs job openings coming in better than forecasted.

Mid-week, ADP nonfarm payrolls, and Q4 GDP numbers failed to deliver market support. The release of the stats coincided with a shift in sentiment towards Russia and Ukraine reaching a ceasefire agreement.

According to the ADP, nonfarm payrolls increased by 455k in March, down from 486k in February. The U.S economy also grew at a slower pace than previously estimated.

Market attention then shifted to Thursday, with inflation, personal spending, and jobless claims drawing investor interest.

A further pickup in inflationary pressure supported FED Chair Powell’s more hawkish stance on monetary policy.

While personal spending was weak, nonfarm payrolls rose at a decent clip in March.

In March, nonfarm payrolls increased by 431k, following a 750k increase in February. The March numbers tested appetite for riskier assets, with the markets seeing 431k good enough for a more aggressive FED rate path.

In the week ending April 1, 2022, the Dollar Spot Index fell by 0.16% to end the week at 98.632. In the week prior, the Index rose by 0.57% to 98.789.

Out of the UK

Q4 GDP and finalized Manufacturing PMI numbers were in focus. Better than expected GDP numbers limited the downside for the Pound.

In Q4, the UK economy grew by 1.3% quarter-on-quarter, up from the first estimate of 0.90%. Manufacturing sector activity slowed in March, however. The PMI declined from 58.0 to 55.2, down from a prelim 55.5.

The better-than-expected GDP numbers for the quarter supported the market’s bet of rate hikes through to November, which limited the damage.

In the week, the Pound fell by 0.52% to end the week at $1.3114. In the week prior, the Pound rose by 0.03% to $1.3182.

The FTSE100 ended the week up 0.73%, following a 1.06% gain from the previous week.

Out of the Eurozone

Mid-week, the German economy was in the spotlight. While the stats were skewed to the negative, the impact on the European majors was modest. With Russia’s invasion of Ukraine ongoing, investors anticipate a near-term impact on economic activity.

In April, Germany’s GfK Consumer Climate Indicator fell from -8.5 to -15.5, with retail sales rising by just 0.3% in February.

Unemployment numbers were also underwhelming, with an 18k fall in unemployment leaving the unemployment rate at 5.0%.

On Friday, manufacturing sector PMI numbers for March also failed to impress.

In March, Spain’s manufacturing PMI fell from 56.9 to 54.2, with Italy’s PMI declining from 58.3 to 55.8. Economists had forecast PMIs of 55.5 and 57.0, respectively.

The French manufacturing PMI fell from 57.2 to 54.7, down from a prelim of 54.8. Germany’s PMI declined from 58.4 to 56.9, down from a prelim 57.6.

For the Eurozone, the manufacturing PMI fell from 58.2 to a 14-month low of 56.6, down from a prelim 57.0.

Other stats in the week included finalized inflation figures for member states and the Eurozone and French consumer spending figures. These stats drew little interest, with Germany’s economy and survey-based data in focus.

For the week, the EUR rose by 0.55% to $1.1043. In the previous week, the EUR fell by 0.62% to $1.0983.

The CAC40 rose by 1.99%, with the EuroStoxx600 and the DAX ending the week with gains of 1.06% and 0.98%, respectively.

For the Loonie

It was another quiet week on the economic data front. Stats were limited to GDP figures for January. In line with forecasts, the economy grew by 0.2% in the month, following 0.1% growth in December.

While positive, a downward trend in crude oil prices weighed on the Loonie.

In the week ending April-01, the Loonie fell by 0.36 to C$1.2522 against the Greenback. In the week prior, the Loonie increased by 1.00% to C$1.2477.

Elsewhere

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

The Aussie Dollar slipped by 0.25% to $0.7496, with the Kiwi Dollar falling 0.65% to end the week at $0.6927.

For the Aussie Dollar

Early in the week, retail sales figures for February were upbeat. Sales increased by 1.8%, following a 1.8% rise in January. Late in the week, private sector credit and manufacturing data were also Aussie Dollar positive.

In February, private sector credit increased by 0.6%, with the AIG Manufacturing Index rising from 53.2 to 55.7.

The numbers were not good enough to deliver another bullish week, however. A pullback in commodity prices, market sentiment towards Fed monetary policy, and COVID-19 woes in China weighed.

For the Kiwi Dollar

Business confidence improved marginally in March. The ANZ Business Confidence Index increased from -51.8 to -41.9. The numbers were not good enough to support the Kiwi Dollar, however.

Weak private sector PMI numbers out of China and China’s latest lockdown measures weighed.

For the Japanese Yen

Retail sales and industrial production disappointed mid-week. In February, retail sales were down 0.8% after rising by 1.1% in January, year-on-year.

Industrial production rose by just 0.1%, partially reversing a 0.8% decline from January.

Tankan survey-based figures for Q1 also failed to impress.

The All-Big Industry CAPEX rose by 2.2%, falling short of a forecasted 4.0% increase.

In the quarter, the Big Manufacturing Outlook Index, Large Manufacturers Index, and Large Non-Manufacturing Index also eased back from Q4 levels.

The Japanese Yen fell by 0.39% to end the week at ¥122.52 against the Dollar. In the week prior, the Yen ended the week down by 2.42% to ¥122.05.

Out of China

Private sector PMIs for March drew interest in the week.

The NBS Manufacturing PMI fell from 50.2 to 49.5, with the Non-Manufacturing PMI declining from 51.6 to 48.4.

More significantly, the Caixin Manufacturing PMI slid from 50.4 to 48.1. New lockdown measures to curb the spread of COVID-19 weighed on manufacturing sector activity.

In the week ending April-01, the Chinese Yuan rose by 0.05% to CNY6.3629. Through the week prior, the Yuan ended the week down by 0.08% to CNY6.3662.

The Hang Seng Index ended the week up 2.97%, with the CSI300 gaining 2.43%.

European Equities: A Week in Review – 01/04/22

The Majors

It was a bullish week for the European majors in the week ending April-1, 2022.

The CAC40 rose by 1.99%, with the EuroStoxx600 and the DAX ending the week with gains of 1.06% and 0.98%, respectively.

It was a choppy week for the European majors. Through the first half of the week, hopes of an end to the Russian invasion of Ukraine drove demand for riskier assets.

Failure to agree to end the invasion led to a partial retracement through the second half of the week.

Economic data took a back seat once more, with disappointing manufacturing sector PMIs having limited impact. A downward trend in crude oil prices was positive amidst concerns over inflation.

The Stats

Mid-week, the German economy was in the spotlight. While the stats were skewed to the negative, the impact on the European majors was modest. With Russia’s invasion of Ukraine ongoing, investors anticipate a near-term impact on economic activity.

In April, Germany’s GfK Consumer Climate Indicator fell from -8.5 to -15.5, with retail sales rising by just 0.3% in February.

Unemployment numbers were also underwhelming, with an 18k fall in unemployment leaving the unemployment rate at 5.0%.

On Friday, manufacturing sector PMI numbers for March also failed to impress.

In March, Spain’s manufacturing PMI fell from 56.9 to 54.2, with Italy’s PMI declining from 58.3 to 55.8. Economists had forecast PMIs of 55.5 and 57.0, respectively.

The French manufacturing PMI fell from 57.2 to 54.7, down from a prelim of 54.8. Germany’s PMI declined from 58.4 to 56.9, down from a prelim 57.6.

For the Eurozone, the manufacturing PMI fell from 58.2 to a 14-month low of 56.6, down from a prelim 57.0.

Other stats in the week included finalized inflation figures for member states and the Eurozone and French consumer spending figures. These stats drew little interest, with Germany’s economy and survey-based data in focus.

From the U.S

It was a busier week on the economic calendar. Early in the week, consumer confidence and JOLTs job openings drew interest. Consumer confidence improved in March, with JOLTs job openings coming in better than forecasted.

Mid-week, ADP nonfarm payrolls, and Q4 GDP numbers failed to deliver market support. The release of the stats coincided with a shift in sentiment towards Russia and Ukraine reaching a ceasefire agreement.

According to the ADP, nonfarm payrolls increased by 455k in March, down from 486k in February. The U.S economy also grew at a slower pace than previously estimated.

Market attention then shifted to Thursday, with inflation, personal spending, and jobless claims drawing investor interest.

A further pickup in inflationary pressure supported FED Chair Powell’s more hawkish stance on monetary policy.

While personal spending was weak, nonfarm payrolls rose at a decent clip in March.

In March, nonfarm payrolls increased by 431k, following a 750k increase in February. The March numbers tested appetite for riskier assets, with the markets seeing 431k good enough for a more aggressive FED rate path.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen rallied by 4.23%, with BMW and Continental ending the week with gains of 1.43% and 1.55%, respectively. Daimler rose by a more modest 0.44%.

It was yet another bullish week for the banking sector. Deutsche Bank and Commerzbank rose by 1.41% and 0.28%, respectively.

From the CAC, it was a bullish week for the banks. BNP Paribas rallied by 3.38%, with Credit Agricole and Soc Gen gaining 2.25% and 2.69%, respectively.

Things were also bullish for the French auto sector. Stellantis NV and Renault ended the week up 1.87% and 4.70%, respectively.

Air France-KLM and Airbus rose by 1.21% and 3.24%, respectively.

On the VIX Index

It was a fourth consecutive week in the red for the VIX in the week ending April-01, marking the fifth decline in seven weeks.

Following a 12.82% slide from the previous week, the VIX fell by 5.67% to end the week at 19.63.

3-days in the red from 5 sessions, which included a 5.67% decline on Monday, delivered the downside.

For the week, the Dow slipped by 0.12%. The NASDAQ 100 and the S&P500 gained 0.65% and 0.06%, respectively.

VIX 010422 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the Eurozone economic calendar. On Monday, trade data from Germany will draw interest ahead of the member state and Eurozone private sector PMIs on Tuesday.

In the second half of the week, the German economy will be back in focus. Factory orders and industrial production will draw attention.

From the U.S, ISM Non-Manufacturing PMI and Jobless claims will draw interest on Tuesday and Thursday.

Away from the economic calendar, Russia’s invasion of Ukraine will remain a key driver in the week. Progress towards a ceasefire would support the European majors.

The Week Ahead – A Busy Economic Calendar and Geopolitics in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 65 stats due out through the week ending 01-April. In the week prior, 43 stats had been in focus.

For the Dollar:

Early in the week, consumer confidence, ADP nonfarm employment, and Q4 GDP numbers will be in focus.

Expect consumer confidence and ADP numbers to be the key.

On Thursday, attention will shift to personal spending, inflation, and jobless claims figures.

The key stat of the week will be the nonfarm payroll numbers due out on Friday.

FOMC member chatter will also need monitoring in the week.

In the week ending 25th March, the Dollar Spot Index rose by 0.57% to 98.789.

For the EUR:

The German economy will be in focus early in the week, with consumer confidence figures due out.

On Thursday, the German economy remains in the spotlight. Retail sales and unemployment figures are due out.

At the end of the week, manufacturing sector PMIs for member states and the Eurozone will also draw more interest.

Prelim March inflation figures for member states and the Eurozone will be the key stats in the week. The markets expect another surge in consumer prices to test support for riskier assets.

For the week, the EUR fell by 0.62% to $1.0983.

For the Pound:

Q4 quarter GDP numbers will draw interest on Thursday, ahead of finalized manufacturing PMI figures on Friday.

With little to consider, expect both sets of numbers to influence.

BoE Governor Bailey speaks on Monday, with MPC Member Broadbent delivering a speech on Wednesday. Any chatter on monetary policy or the economic outlook will influence.

The Pound rose by 0.03% to end the week at $1.3182.

For the Loonie:

It’s a particularly quiet week ahead. Economic data is limited to GDP numbers on Thursday. While the numbers will provide direction, market risk sentiment and crude oil prices will remain the key driver.

The Loonie ended the week up 1.00% to C$1.2477 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

Retail sales and private sector credit figures will be the main stats of the week. Expect retail sales to have the greatest impact, with consumption key for economic growth.

The Aussie Dollar jumped by 1.35% to $0.7515.

For the Kiwi Dollar:

Building consents and business confidence figures are the key stats of the week. Expect business confidence to have the most influence on the Kiwi Dollar.

The Kiwi Dollar ended the week up 0.93% to $0.6972.

For the Japanese Yen:

It’s a busier week ahead, with retail sales, industrial production, and Tankan survey data to draw interest.

While the numbers will draw attention, we don’t expect Japanese Yen sensitivity. Monetary policy divergence and market risk sentiment will remain the key drivers.

The Japanese Yen tumbled by 2.42% to end the week at ¥122.05 against the U.S Dollar.

Out of China

Private sector PMIs for March will be in focus. While the NBS figures will draw interest, the Caixin Manufacturing PMI, due out on Friday, will impact market risk sentiment.

In the week ending 25th March, the Yuan fell by 0.08% to end the week at 6.3662 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, with the markets looking for news of a ceasefire.

European Equities: A Week in Review – 25/03/22

The Majors

It was a mixed week for the European majors in the week ending 25th March.

The EuroStoxx600 slipped by 0.06%, with the CAC40 and the DAX ending the week down by 1.01% and 0.74%, respectively.

Disappointing economic data from the Eurozone, surging crude oil prices amidst inflation concerns, and hawkish Fed Chair Powell chatter contributed to the losses.

Russia’s continued bombing of civilian sites in Ukraine remained market negative, with the ECB highlighting the downside risks of the invasion to the Eurozone economy.

The Stats

Prelim private sector PMI figures for France, Germany, and the Eurozone were in focus on Thursday.

While the PMIs came in ahead of forecasts, private sector activity grew at a slower pace in March. The Eurozone’s composite PMI fell from 55.5 to a 2-month low of 54.5. Weighing on private sector activity was the manufacturing sector. The Eurozone’s manufacturing PMI fell to a 14-month low of 57.0.

On Friday, German business sentiment figures also disappointed, with the manufacturing sector weighing on headline figures. The IFO Business Climate Index fell from 98.5 to 90.8. While current sentiment remained resilient, the expectations indicator tumbled from 98.4 to 85.1.

From the ECB, the Economic Bulletin added to the doom and gloom, with the ECB highlighting uncertainty ahead and risks to the economy tilted to the downside.

From the U.S

It was a mixed week on the economic data front. Core durable goods and consumer sentiment were disappointing, while private sector PMI and labor market numbers were upbeat.

According to prelim figures, the U.S Services PMI rose from 56.5 to 58.9, with the manufacturing PMI up from 57.3 to 58.5. In the week ending 18th March, jobless claims fell back to sub-200k levels, also market positive.

Core durable goods orders fell unexpectedly, however, with consumer sentiment waning in March.

On the monetary policy front, Fed Chair Powell took a hawkish stance on interest rates. Early in the week, Powell talked of a willingness to take a more aggressive rate path to curb inflation.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Volkswagen ended the week with losses of 3.57% and 1.78%, respectively. BMW rallied by 2.62%, however, with Daimler ending the week up 0.93%.

It was another bullish week for the banking sector. Deutsche Bank rallied by 5.75%, with Commerzbank gaining 2.29%.

From the CAC, it was a bearish week for the banks. BNP Paribas led the way, sliding by 6.28%, with Soc Gen and Credit Agricole seeing losses of 3.02% and 1.93%, respectively.

Things were also bearish for the French auto sector. Stellantis NV and Renault ended the week down 1.53% and 1.33%, respectively.

Air France-KLM and Airbus rose by 2.90% and 1.32%, respectively.

On the VIX Index

It was a third consecutive week in the red for the VIX in the week ending 25th March, marking the fourth decline in six weeks.

Following a 22.37% slide from the previous week, the VIX fell by 12.82% to end the week at 20.81.

4-days in the red from 5 sessions, which included an 8.06% slide on Thursday, delivered the downside.

For the week, the Dow rose by 0.31%, with the NASDAQ 100 and the S&P500 gaining 1.98% and 1.79%, respectively.

VIX 260322 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the Eurozone economic calendar. Early in the week, the German economy will draw attention. Consumer confidence figures are due out.

On Thursday, the focus will remain on the German economy. Retail sales and unemployment figures are in focus.

At the end of the week, manufacturing sector PMIs for member states and the Eurozone will also draw more interest.

On the inflation front, prelim March inflation figures for member states and the Eurozone will be key. The markets expect another surge in consumer prices, which will test support for riskier assets.

From the U.S, consumer confidence, ADP nonfarm employment, and Q4 GDP numbers will influence early in the week.

Expect consumer confidence and ADP numbers to be key.

On Thursday, attention will shift to personal spending, inflation, and jobless claims figures.

The key stat of the week, however, will be the nonfarm payroll numbers due out on Friday.

On the monetary policy front, FOMC member chatter will need monitoring.

Away from the economic calendar, Russia’s invasion of Ukraine will remain a key driver in the week.

The Weekly Wrap – FED Chair Powell and Economic Data Deliver USD Support

The Stats

It was a quieter week on the economic calendar for the week ending 25th March.

A total of 43 stats were monitored, following 59 stats in the week prior.

Of the 43 stats, 23 came in ahead of forecasts, with 19 economic indicators coming up short of forecast. 1 stat was in line with the forecast in the week.

Looking at the numbers, 15 of the stats reflected an upward trend from previous figures. Of the remaining 28 stats, 27 reflected a deterioration from previous numbers.

Fed Chair Powell, disappointing stats, and Russia’s ongoing invasion of Ukraine delivered Dollar support in the week. Early in the week, the Fed Chair talked of the willingness to take an aggressive rate path if needed.

Out of the U.S

It was a mixed week on the economic data front. Core durable goods and consumer sentiment were disappointing, while private sector PMI and labor market numbers were upbeat.

According to prelim figures, the U.S Services PMI rose from 56.5 to 58.9, with the manufacturing PMI up from 57.3 to 58.5. In the week ending 18th March, jobless claims fell back to sub-200k levels, also Dollar positive.

Core durable goods orders fell unexpectedly, however, with consumer sentiment waning in March.

In the week ending 25th March, the Dollar Spot Index rose by 0.57% to end the week at 98.789. In the week prior, the Index fell by 0.90% to 98.229.

Out of the UK

Inflation, private sector PMIs, and retail sales were the key stats of the week.

It was a mixed bag for the Pound. While inflationary pressures picked up once more, consumer spending fell in February, with rising prices affecting spending.

On the positive, however, was a pickup in service sector activity. In March, the services PMI rose from 60.5 to 61.0.

In the week, the Pound increased by 0.03% to end the week at $1.3182. The Pound rose by 1.08% to $1.3178 in the week prior.

The FTSE100 ended the week up 1.06%, following a 3.48% gain from the previous week.

Out of the Eurozone

Prelim private sector PMI figures for France, Germany, and the Eurozone were in focus on Thursday.

While the PMIs came in ahead of forecasts, private sector activity grew at a slower pace in March. The Eurozone’s composite PMI fell from 55.5 to a 2-month low of 54.5. Weighing on private sector activity was the manufacturing sector. The Eurozone’s manufacturing PMI fell to a 14-month low of 57.0.

On Friday, German business sentiment figures also disappointed, with the manufacturing sector weighing on headline figures. The IFO Business Climate Index fell from 98.5 to 90.8. While current sentiment remained resilient, the expectations indicator tumbled from 98.4 to 85.1.

From the ECB, the Economic Bulletin added to the doom and gloom, with the ECB highlighting uncertainty ahead and risks to the economy tilted to the downside.

For the week, the EUR fell by 0.62% to $1.0983. In the previous week, the EUR rose by 1.27% to $1.1051.

The EuroStoxx600 slipped by 0.06%, with the CAC40 and the DAX ending the week down 1.01% and by 0.74%, respectively.

For the Loonie

It was a quiet week on the economic data front. Stats were limited to RMPI figures that had a muted impact on the Loonie.

The upward trend in crude oil prices provided support in the week.

In the week ending 25th March, the Loonie rose by 1.00 to C$1.2477 against the Greenback. In the week prior, the Loonie increased by 1.11% to C$1.2603.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar rallied by 1.35% to $0.7515, with the Kiwi Dollar gaining 0.93% to end the week at $0.6972.

Both found support, with the markets viewing distance from the Russian invasion of Ukraine as positive.

For the Aussie Dollar

There were no material stats to provide the Aussie Dollar with direction.

For the Kiwi Dollar

Trade and consumer sentiment were the key stats in the week. The numbers had a muted impact on the Kiwi Dollar, however, despite weaker consumer sentiment in the first quarter.

Trade data was mixed for February. While the trade deficit narrowed compared with January, the deficit widened year on year to NZ$8,370m.

Further disruption to supply chains is evidenced in surveys, suggesting plenty of uncertainty ahead.

For the Japanese Yen

Private sector PMIs and inflation were the main stats of the week. The numbers failed to impress. Tokyo’s annual core rate of inflation ticked up from 0.5% to 0.8%, with the services sector continuing to contract. In March, the services PMI rose from 44.2 to 48.7.

A pickup in manufacturing sector activity was of little consolation, with the BoJ seeing the Russian invasion of Ukraine as a significant risk to the economic outlook.

The Japanese Yen slid by 2.42% to end the week at ¥122.05 against the Dollar. In the week prior, the Yen ended the week down by 1.60% to ¥119.170.

Out of China

There were no major stats from China for the markets to consider in the week.

In the week ending 18th March, the Chinese Yuan fell by 0.08% to CNY6.3662. Through the week prior, the Yuan ended the week down by 0.31% to CNY6.3393.

The Hang Seng Index ended the week down 0.04%, with the CSI300 falling 2.14%.

Activists spray paint TotalEnergies’ HQ west of Paris over Russia ties

PARIS (Reuters) – Pressure mounted on Totalenergies over its ties to Russia as activists spray-painted its headquarters west of Paris on Monday and France’s green presidential candidate accused the company and its boss of complicity with the Kremlin.

TotalEnergies, one of the world’s top oil producers and the fourth-largest company in France’s CAC 40 bluechip index by market capitalization, has become increasingly isolated among oil majors as it holds on to its interests in Russia despite the latter’s invasion of Ukraine.

Environmental activists, led by the French group “Les amis de la terre” (Friends of the Earth), said they had sprayed black paint on the glass doors at the entrance of TotalEnergie’s building in the La Defense business district, posting a video https://twitter.com/amisdelaterre/status/1505823679653031943?s=20&t=M2xK2SW-rbufm7CTKOnX6A of around a dozen activists dressed in yellow vests.

“At every minute, fossil fuels are arming the regime of the Kremlin and are the reason for people dying every day since almost a month”, a woman could be heard shouting.

TotalEnergies declined to comment on the Monday incident.

The company last month condemned what it called Moscow’s military aggression in Ukraine, but stopped short of joining rivals Shell, BP and Exxon Mobil in announcing an exit from its interests in resource-rich Russia.

Reposting the activists’ video, France’s green presidential candidate, Yannick Jadot, further criticised the company https://twitter.com/yjadot/status/1505869238006960133?s=20&t=VQPPGG_EAfqoxMdXsTkyKg.

“Yes, Total must leave Russia and stop funding Putin’s war”, said Jadot in a tweet. “Your complicity costs lives”, he said, tagging the Twitter accounts of TotalEnergies and Chief Executive Patrick Pouyanne.

In response to Jadot’s tweet https://twitter.com/TotalEnergiesPR/status/1505813457605738501?s=20&t=hueaIGOfVq9nyRKKo0Vl7Q, the oil company’s press team called the accusations of complicity “unfounded”, saying that this would imply providing “direct aid” to the Russian state.

“TotalEnergies does not operate any oil or gas field in Russia”, the company said.

TotalEnergies holds a 19.4% stake in Novatek, Russia’s largest producer of liquefied natural gas. It also has a 20% stake in the Yamal LNG project, and a 10% interest in Arctic LNG 2, scheduled to start production next year.

Russia constituted 24% of TotalEnergies’ proven reserves and 17% of its oil and gas production in 2020.

A senior French finance ministry official had told Reuters earlier this month: “It’s up to the company to determine the balance of risk.”

(Reporting by Tassilo Hummel and Benjamin Mallet, Editing by Bernadette Baum)

The Week Ahead – Russia, Central Banks, and Private Sector PMIs in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 43 stats due out through the week ending 25th March. In the week prior, 59 stats had been in focus.

For the Dollar:

On Thursday, core durable goods, private sector PMIs, and jobless claims will be key.

Expect the services PMI and jobless claims to draw the greatest interest.

Following last week’s projections and rate hike, FOMC member chatter will also need monitoring.

On the monetary policy front, FED Chair Powell is scheduled to speak on Monday and Wednesday

In the week ending 18th March, the Dollar Spot Index fell by 0.90% to 98.233.

For the EUR:

Prelim private sector PMIs for France, Germany, and the Eurozone will be in focus on Thursday. Expect Germany and the Eurozone’s PMIs to be key.

On Friday, Germany’s IFO Business Climate Index figures will also provide direction.

ECB President Lagarde’s speeches on Monday and Tuesday and the ECB Economic Bulletin on Thursday will also draw plenty of interest.

For the week, the EUR rallied by 1.27% to $1.1051.

For the Pound:

It’s a busy week ahead.

Mid-week, inflation figures for February will draw interest ahead of private sector PMIs on Thursday.

Expect the inflation and services PMI to be the key stats.

At the end of the week, retail sales figures will also provide direction, however.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak ahead of the Autumn budget on Wednesday.

The Pound rose by 1.08% to end the week at $1.3178.

For the Loonie:

Economic data is limited to RMPI numbers for February. We don’t expect too much influence from the figures, however.

Crude oil prices and market risk sentiment will remain the key drivers.

The Loonie ended the week up 1.11% to C$1.2603 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

There are no material stats to provide the Aussie Dollar with direction. The lack of stats will leave the Aussie Dollar in the hands of market risk sentiment in the week.

The Aussie Dollar jumped by 1.67% to $0.7415.

For the Kiwi Dollar:

Trade data will be in focus at the start of the week, with consumer confidence figures mid-week.

Both sets of numbers will provide the Kiwi Dollar with direction in the first half of the week.

The Kiwi Dollar ended the week up 1.45% to $0.6908.

For the Japanese Yen:

In a shortened week, private sector PMI and Tokyo inflation figures for March are the only stats to consider. With the numbers due out on Thursday and Friday, market risk sentiment and monetary policy divergence will remain the key drivers.

The Japanese Yen slid by 1.60% to end the week at ¥119.170 against the U.S Dollar.

Out of China

There are no material stats due out of China to provide the markets with direction.

While there are no stats due out, the PBoC is in action on Monday. Following stimulus from Beijing, a cut in loan prime rates would support riskier assets.

In the week ending 18th March, the Yuan fell by 0.35% to end the week at 6.3612 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, with the markets now looking for progress towards a ceasefire.

The Weekly Wrap – Riskier Assets Gain at the Expense of the USD

The Stats

It was a busier week on the economic calendar for the week ending 18th March.

A total of 59 stats were monitored, following 50 stats in the week prior.

Of the 59 stats, 29 came in ahead of forecasts, with 23 economic indicators coming up short of forecast. 7 stats were in line with forecasts in the week.

Looking at the numbers, 32 of the stats reflected an upward trend from previous figures. Of the remaining 27 stats, 25 reflected a deterioration from previous numbers.

While the stats influenced, geopolitics and monetary policy were the key drivers for the global financial markets. Hopes of Russia agreeing to a ceasefire delivered support for riskier assets. Market reaction to the FED’s rate hike and projections was also risk-on.

Out of the U.S

In the first half of the week, wholesale inflation and retail sales were the key stats. The numbers were dollar negative.

The core producer price index increased by 0.2% in February, softer than a 1.0% rise in January.

More significantly, retail sales were also disappointing. Core retail sales rose by just 0.2%, with retail sales up 0.3% in February. Both had seen marked increases in the month prior.

Jobless claims and Philly FED Manufacturing numbers were more upbeat later in the week. In February, the Philly FED Manufacturing PMI rose from 16.0 to 27.4, with initial jobless claims falling from 229k to 214k in the week ending 10th March.

While the stats drew plenty of interest, the FED monetary policy decision and projections were key in the week.

In line with market expectations, the FED raised interest rates by 25 basis points on Wednesday, with interest rate projections hawkish for the remainder of the year. FOMC members projected interest rates to hit 2.8% by Q1 2023 versus a previous forecast of 0.9%.

In the week ending 18th March, the Dollar Spot Index fell by 0.90% to end the week at 98.229. In the week prior, the Index rose by 0.48% to 99.124.

Out of the UK

Claimant counts and the UK’s unemployment rate were the key stats of the week. The numbers were Pound positive. Claimant counts fell by a further 48.1k in February, with the unemployment rate declining from 4.1% to 3.9%.

While the stats were Pound positive, the Bank of England monetary policy decision was the main event.

In line with market expectations, the BoE lifted interest rates to 0.75%, with the UK bracing for double-digit inflation for the first time since the 1980s.

The Pound rose by 1.08% to end the week at $1.3178. In the week prior, the Pound slid by 1.46% to $1.3037.

The FTSE100 ended the week up 3.48%, following a 2.41% gain from the previous week.

Out of the Eurozone

ZEW Economic sentiment figures for Germany and the Eurozone disappointed in the week. The markets were expecting weak numbers, however, as analysts assessed the impact of the Russian invasion of Ukraine on the economic outlook.

Late in the week, Eurozone trade data and wage growth had a muted impact on the EUR. The markets brushed aside the figures despite wages growing at a softer pace in Q4 and the Eurozone’s trade deficit widening from €4.6bn to €27.2bn in January.

For the week, the EUR rose by 1.27% to $1.1051. In the previous week, the EUR fell by 0.15% to $1.0912.

The EuroStoxx600 rose by 5.26%, with the CAC40 and the DAX ending the week up 5.75% and by 5.76%, respectively.

For the Loonie

Inflation and retail sales were in focus in the week. Inflationary pressures picked up in February, with the core annual rate of inflation accelerating from 4.3% to 4.8%. The retail sales figures were also Loonie positive. Consumer spending jumped 3.2% in January, reversing a 2% slide in the month prior.

The numbers were not enough to sink the Loonie, however. An upward trend in crude oil prices in March continued to deliver Loonie support.

In the week ending 18th March, the Loonie rose by 1.11 to C$1.2603 against the Greenback. In the week prior, the Loonie declined by 0.10% to C$1.2744.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar rose by 1.67% to $0.7415, with the Kiwi Dollar gaining 1.45% to end the week at $0.6908.

For the Aussie Dollar

Employment figures impressed in the week, providing Aussie Dollar support.

In February, full employment surged by 121.9k, reversing a 17.0k fall from January. As a result, Australia’s unemployment rate fell from 4.2% to 4.0%.

Also positive for the Aussie Dollar in the week was the hope of Beijing delivering economic stimulus to support growth.

For the Kiwi Dollar

Economic data was limited to Q4 GDP numbers that fell short of forecasts. The numbers were not bad enough, however, to weigh on the Kiwi Dollar.

In Q4, the New Zealand economy grew by 3.0%, rebounding from a 3.7% contraction in the quarter prior.

For the Kiwi, the hopes of Beijing stimulus to support the Chinese economy were also positive.

For the Japanese Yen

Trade data and inflation were in focus in the week. A sharp jump in exports led to a narrowing of Japan’s trade deficit in February. Inflationary pressures also picked up, however. Japan’s core annual rate of inflation accelerated from 0.2% to 0.6%.

Ultimately, monetary policy divergence left the Japanese Yen on the back foot against the Dollar.

On Friday, the BoJ left monetary policy unchanged, while raising concerns over the impact of Russia’s invasion of Ukraine on growth.

The Japanese Yen slid by 1.60% to end the week at ¥119.170 against the Dollar. In the week prior, the Yen ended the week tumbled by 2.15% to ¥117.290.

Out of China

Fixed asset investment and industrial production figures were in focus. The numbers didn’t disappoint, though concerns over fresh lockdown measures to contain a new wave of COVID-19 infections overshadowed the upbeat numbers.

In February, fixed asset investments rose by 12.2%, year-on-year, which was up from 4.9% in January.

Industrial production increased by 7.5%, which was up from 4.3% in January.

Hopes of fresh stimulus to support China’s economy supported riskier assets in the week.

In the week ending 18th March, the Chinese Yuan fell by 0.35 to CNY6.3612. Through the week prior, the Yuan ended the week down by 0.31% to CNY6.3393.

The Hang Seng Index ended the week up 4.18%, while the CSI300 fell by 0.94%.

European Equities: A Week in Review – 18/03/22

The Majors

It was another bullish week for the European majors in the week ending 18th March.

The EuroStoxx600 rose by 5,26%, with the CAC40 and the DAX ending the week up by 5.75% and 5.76%, respectively.

Despite the ongoing Russian invasion of Ukraine, talks of a ceasefire delivered mid-week support. The hope of fresh stimulus from China to support the Chinese economy was also market positive. A retreat in crude oil prices in the week added further support.

Economic data from the Eurozone took a back seat, despite a slump in economic sentiment towards Germany and the Eurozone.

FED monetary policy also failed to spook the markets, with the FED lifting rates by just 25 basis points on Wednesday.

The Stats

ZEW Economic sentiment figures for Germany and the Eurozone disappointed in the week. The markets were expecting weak numbers, however, as analysts assess the impact of the Russian invasion of Ukraine on the economic outlook.

Late in the week, Eurozone trade data and wage growth had a muted impact on the EUR. The impact was muted despite wages growing at a softer pace in Q4 and the Eurozone’s trade deficit widening from €4.6bn to €27.2bn in January.

From the U.S

In the first half of the week, wholesale inflation and retail sales were the key stats. The numbers were mixed.

The core producer price index increased by 0.2% in February, which was softer than a 1.0% rise in January.  For riskier assets, the softer wholesale inflation figures were market positive.

More significantly, retail sales were also disappointing. Core retail sales rose by just 0.2%, with retail sales up 0.3% in February. Both had seen marked increases in the month prior.

Jobless claims and Philly FED Manufacturing numbers were more upbeat later in the week. In February, the Philly FED Manufacturing PMI rose from 16.0 to 27.4, with initial jobless claims falling from 229k to 214k in the week ending 10th March.

While the stats drew plenty of interest, the FED monetary policy decision and projections were key in the week.

In line with market expectations, the FED raised interest rates by 25 basis points on Wednesday, with interest rate projections hawkish for the remainder of the year. Interest rates are projected to hit 2.8% by Q1 2023 versus a previously forecast of 0.9%.

From China

Fixed asset investment and industrial production figures were in focus. The numbers didn’t disappoint, though concerns over renewed lockdown measures to contain a new wave of COVID-19 infections overshadowed the upbeat numbers.

In February, fixed asset investments rose by 12.2%, year-on-year, up from 4.9% in January.

Industrial production increased by 7.5%, up from 4.3% in January.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Continental rallied by 7.79%, with Volkswagen gaining 7.11%. BMW and Daimler ended the week up 4.81% and 6.90%, respectively.

It was a better week for the banking sector. Deutsche Bank and Commerzbank surged by 14.94% and 12.18%, respectively.

From the CAC, it was a bullish week for the banks. Soc Gen led the way, rallying by 10.36%, with BNP Paribas and Credit Agricole seeing gains of 8.81% and 9.34%, respectively.

Things were also bullish for the French auto sector. Stellantis NV and Renault ended the week up 9.25% and 4.48%, respectively.

Air France-KLM and Airbus rose by 6.87% and 2.49%, respectively.

On the VIX Index

It was a second consecutive week in the red for the VIX in the week ending 18th March, marking the third decline in 5 weeks.

Following a 3.85% fall from the previous week, the VIX slid by 22.37% to end the week at 23.87.

4-days in the red from 5 sessions, which included a 10.59% slide on Wednesday, delivered the downside.

For the week, the NASDAQ jumped 8.18%. The Dow and the S&P500 rallied by 5.50% and 6.16%, respectively.

VIX 190322 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the Eurozone economic calendar. Prelim March private sector PMIs for France, Germany, and the Eurozone will be the key stats of the week. The PMIs are due on Thursday, ahead of Germany’s IFO Business Climate Index figures on Friday.

From the U.S, economic data on Thursday will influence.

Key stats include jobless claims, core durable goods, and March’s prelim services PMI.

Away from the economic calendar, news updates on Russia’s invasion of Ukraine and any moves by China will also need monitoring.

The Week Ahead – Central Bank Policy Decisions and Russia in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 59 stats due out through the week ending 18th March. In the week prior, 50 stats had been in focus.

For the Dollar:

Wholesale inflation will be in focus early in the week. Mid-week, retail sales will also be key ahead of the weekly jobless claims on Thursday.

The main event of the week, however, will be the FED monetary policy decision on Wednesday. With the markets expecting a rate hike, the FOMC projections and FED press conference will be key drivers.

In the week ending 11th March, the Dollar Spot Index rose by 0.48% to 99.124.

For the EUR:

ZEW Economic Sentiment figures for Germany and the Eurozone will draw interest early in the week. The markets will get a sense of how analysts see the Russian invasion of Ukraine impacting the respective economies.

At the end of the week, trade data and wage growth for the Eurozone will also draw attention.

Other stats in the week, include finalized member state and Eurozone inflation numbers for February. We don’t expect these numbers to influence, however. The recent surge in oil prices will further drive inflationary pressures in March.

For the week, the EUR slipped by 0.15% to $1.0912.

For the Pound:

Claimant counts and the UK unemployment rate are the key stats for the week.

While the numbers will draw interest, the Bank of England monetary policy decision will be the main event of the week. On Thursday, the markets will be looking for views on how Russia’s invasion of Ukraine will impact the UK economy and affect monetary policy.

The Pound slid by 1.46% to end the week at $1.3037.

For the Loonie:

Inflation and retail sales figures are due out in the week. While both sets of numbers will draw attention, market risk sentiment and crude oil prices will provide direction.

OPEC’s monthly report on Tuesday will certainly garner plenty of interest, following sanctions on Russia.

The Loonie ended the week down 0.10% to C$1.2744 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

Employment figures for February are the main stats of the week. While the numbers will influence, market risk sentiment will remain the key driver.

The Aussie Dollar slid by 1.04% to $0.7293.

For the Kiwi Dollar:

It’s a quiet week ahead, with stats limited 4th quarter GDP numbers. We don’t expect the numbers to influence, with the markets looking forward.

The Kiwi Dollar ended the week down by 0.74% to $0.6809.

For the Japanese Yen:

Trade and inflation figures are due out in the week. Barring an unexpected spike in consumer prices, however, the numbers should have a muted impact on the Yen.

On the monetary policy front, the Bank of Japan is also in focus, though the markets are not expecting any surprises.

The Japanese Yen slid by 2.15% to end the week at ¥117.290 against the U.S Dollar.

Out of China

Industrial production, fixed asset investments, and retail sales figures are in focus on Tuesday. With little else for the markets to consider, the stats will provide some distraction for the markets.

In the week ending 11th March, the Yuan fell by 0.31% to end the week at 6.3393 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, which will continue to overshadow economic data.

The Weekly Wrap – Updates on Russia and Ukraine Gyrated the Markets

The Stats

It was a quieter week on the economic calendar for the week ending 11th March.

A total of 50 stats were monitored, following 79 stats in the week prior.

Of the 50 stats, 24 came in ahead of forecasts, with 18 economic indicators coming up short of forecast. 8 stats were in line with forecasts in the week.

Looking at the numbers, 24 of the stats reflected an upward trend from previous figures. Of the remaining 26 stats, 25 reflected a deterioration from previous numbers.

While the stats drew interest, geopolitics remained the key driver. Russia’s continued invasion of Ukraine weighed on riskier assets, while hopes of talks eased some market angst.

Out of the U.S

Inflation and jobless claims were the key stats in the week.

In the week ending 3rd March, initial jobless claims increased from 216k to 227k. More significantly, the annual rate of inflation accelerated from 7.5% to 7.9%. The core annual rate of inflation picked up from 6.0% to 6.4%, casting yet more FED monetary policy uncertainty on the markets.

In the week ending 4th March, the Dollar Spot Index rose by 0.48% to end the week at 99.124. In the week prior, the Index jumped by 2.10% to 98.648.

Out of the UK

Industrial and manufacturing production, GDP, and trade data were in focus. The stats were mixed for the Pound.

Industrial and manufacturing production increased by 0.7% and by 0.8%, respectively, in January. The economy grew by 0.8%, reversing a 0.2% contraction from the previous month.

Trade data disappointed, however. The UK’s trade deficit widened from £12.53bn to £26.50bn, in January.

In the week, the Pound slid by 1.46% to end the week at $1.3037. In the week prior, the Pound fell by 1.33% to $1.3230.

The FTSE100 ended the week up 2.41%, partially reversing a 6.71% slide from the previous week.

Out of the Eurozone

The German economy was in focus early in the week. Impressive numbers provided little support, however, with the January numbers not capturing the impact of sanctions on the German economy.

In January, factory orders rose by 1.8%, with industrial production up 2.7%. Consumer spending was also on the rise, despite the continued rise in consumer prices. Retail sales increased by 2.7% in January.

Other stats, including Eurozone GDP and member state inflation figures, drew even less attention, with the ECB in action.

In line with market expectations, the ECB left interest rates unchanged on Thursday. The ECB did announce that it would wind down asset purchases faster than planned.

The more hawkish stance came despite ECB President Lagarde conceding that the Russian invasion of Ukraine will have a material impact on economic activity and inflation.

For the week, the EUR slipped by 0.15% to $1.0912. In the previous week, the EUR slid by 3.02% to $1.0928.

The EuroStoxx600 rose by 2.23%, with the CAC40 and the DAX ending the week up by 3.28% and by 4.07%, respectively.

For the Loonie

Trade and employment figures were upbeat in the week.

In January, Canada’s trade balance rose from C$1.58bn to C$2.62bn.

More significantly, employment surged by 336.6k in February, reversing a 200.1k slide from January. As a result, the unemployment rate fell from 6.5% to 5.5%.

In the week ending 11th March, the Loonie slipped by 0.10% to C$1.2744 against the Greenback. In the week prior, the Loonie had declined by 0.14% to C$1.2731.

Elsewhere

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

The Aussie Dollar slid by 1.04% to $0.7293, with the Kiwi Dollar falling by 0.74% to end the week at $0.6809.

For the Aussie Dollar

Business and consumer confidence delivered mixed results in the week.

In February, the NAB Business Confidence Index climbed from 4.0 to 13.0. Consumer sentiment waned, however. In March, the Westpac Consumer Sentiment Index fell by 4.2%, following on from a 1.3% decline in February.

For the Kiwi Dollar

Economic data was limited to electronic card retail sales and business PMI figures.

In February, electronic card retail sales slid by 7.8%, reversing a 3.0% increase from January. The Business PMI rose from 52.3 to 53.6 but was not enough to reverse losses for the Kiwi Dollar, which saw deep red on Friday.

For the Japanese Yen

GDP and household spending numbers were in focus, with the stats negative in the week.

In the 4th quarter, the Japanese economy grew by 1.1%, which was down from a prelim 1.4%. Year on year, the economy expanded by 4.6%, which was down from a prelim 5.6%.

Household spending also failed to impress. In January, spending fell by 1.2%, reversing a 0.2% increase from December.

The Japanese Yen tumbled by 2.15% to end the week at ¥117.290 against the Dollar. In the week prior, the Yen ended the week up by 0.63% to ¥114.820.

Out of China

Trade and inflation data from China also had a limited impact on the global financial markets, despite upbeat numbers.

China’s USD trade surplus widened from $94.46bn to $115.95bn in February. The annual rate of inflation held steady at 0.9%, which was also market positive.

In the week ending 11th March, the Chinese Yuan fell by 0.31 to CNY6.3393. Through the week prior, the Yuan had ended the week up by 0.03% to CNY6.3195.

The Hang Seng Index and the CSI300 ended the week down by 6.17% and by 4.22%, respectively.

European Equities: A Week in Review – 11/03/22

The Majors

It was a bullish week for the European majors in the week ending 11th March. The upside in the week was modest, however, with the major European bourses still deep in the red for the current month.

Once more, economic data took a back seat, with the markets at the mercy of news updates on Russia’s invasion of Ukraine.

Hopes of a resolution through diplomatic channels provided support.

The EuroStoxx600 rose by 2.23%, with the CAC40 and the DAX ending the week up by 3.28% and by 4.07%, respectively.

The Stats

The German economy was in focus early in the week. Impressive numbers provided little support, however, with the January numbers not capturing the impact of sanctions on the German economy.

In January, factory orders rose by 1.8%, with industrial production up 2.7%. Consumer spending was also on the rise, despite the continued increase in consumer prices. Retail sales jumped by 2.7% in January.

Other stats, including Eurozone GDP and member state inflation figures, drew even less attention, with the ECB in action.

In line with market expectations, the ECB left interest rates unchanged on Thursday. The ECB did announce that it would wind down asset purchases faster than planned. The more hawkish stance came despite ECB President Lagarde conceding that the Russian invasion of Ukraine will have a material impact on economic activity and inflation.

From the U.S

Inflation and jobless claims were the key stats in the week.

In the week ending 3rd March, initial jobless claims increased from 216k to 227k. More significantly, the annual rate of inflation accelerated from 7.5% to 7.9%. The core annual rate of inflation picked up from 6.0% to 6.4%, casting yet more FED monetary policy uncertainty on the markets.

From Elsewhere

Trade and inflation data from China also had a limited impact on the European majors, despite upbeat numbers.

China’s USD trade surplus widened from $94.46bn to $115.95bn in February. The annual rate of inflation held steady at 0.9%, which was also market positive.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Daimler rose by 0.55% and by 1.02%, while BMW and Volkswagen ended the week down by 0.93% and by 0.55%, respectively.

It was a better week for the banking sector. Deutsche Bank and Commerzbank rallied by 4.84% and by 4.87%, respectively.

From the CAC, it was a mixed week for the banks. Credit Agricole slipped by 0.10%, while BNP Paribas and Soc Gen saw gains of 3.90% and 6.68%, respectively.

Things were bearish for the French auto sector. Stellantis NV and Renault fell by 2.36% and by 3.50% respectively.

Air France-KLM and Airbus rose by 4.99% and by 6.65%, respectively.

On the VIX Index

It was back into the red for the VIX in the week ending 11th March.

Partially reversing a 15.91% rise from the previous week, the VIX fell by 3.85% to end the week at 30.75.

3-days in the red from 5 sessions, which included a 7.63% fall on Wednesday delivered the downside.

For the week, the NASDAQ slid by 3.53%, with the Dow and the S&P500 falling by 1.99% and 2.88%, respectively.

VIX 120322 Weekly Chart

The Week Ahead

It’s a quiet week ahead on the Eurozone economic calendar. The German and Eurozone ZEW Economic Sentiment figures for March will be in focus on Tuesday. On Friday, Eurozone trade and wage growth figures will also draw interest.

We don’t expect the numbers to have a material impact on the European majors, however. News updates on Russia and Ukraine will remain pivotal in the week ahead.

From the U.S, wholesale inflation and retail sales figures will influence ahead of the FOMC monetary policy decision on Wednesday. FED Chair Powell had talked of a smaller rate hike this month and then more aggressive hikes in the months ahead. Expect the projections and press conference to therefore have the greatest impact.

On Thursday jobless claims and Philly FED manufacturing numbers are also due out but should have a muted impact on the European markets that will be responding to the FED’s overnight projections.

From China, fixed asset investment, industrial production, and retail sales figures will need considering on Tuesday.

European shares skid to near 1-year low on Russia oil ban prospects

By Sruthi Shankar, Susan Mathew and Bansari Mayur Kamdar

(Reuters) – European stocks ended off session lows on Monday, helped by a 4.3% rally in energy stocks as oil prices rose above $130 a barrel, but inflation fears amid the Russia-Ukraine conflict saw German and Italian shares confirm a bear market.

London’s commodity-heavy FTSE 100 lost the least, down 0.4% with oil majors BP Plc and Shell jumping 3.8% and 8%, respectively, as the U.S. and Western allies weigh a ban on importing Russian oil over its invasion of Ukraine which Moscow calls a “special operation”. [O/R]

Europe’s largest economy, Germany, is not currently planning to stop importing Russian oil, gas and coal but is keeping the option open, Finance Minister Christian Lindner said on Monday.

“Germany is one of those European economies who is going to get a severe hit if the allies and the U.S. impose sanctions on Russian oil,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

“We are already at skyrocketing inflation… We could see a situation where we have a high inflation and high unemployment and a weakened global growth. A stagflation is, unfortunately, a very highly likely scenario.”

The pan-European STOXX 600 index cut losses of around 3% to close at a near one-year low, down 1.1%. Banking and auto stocks led declines.

The German DAX and Italy’s MIB have shed more than 20% from their record closing highs on Jan. 5, confirming bear market levels. The indexes were down 2.0% and 1.4% respectively for the day.

“We were expecting European stocks to outperform their U.S. peers (this year). But, right now, with the war at Germany’s doorstep, it’s not going to be the case anymore.”

The euro-zone bank index tumbled 4.1% to a 13-month low ahead of a European Central Bank meeting later this week, with mixed views about how the central bank will respond to the potential economic impact of the Ukraine conflict.

Shares in UniCredit, Raiffeisen and Societe Generale, among banks exposed to Russia, all fell between 4.2% and 5.7%.

Russia supplies accounted for 17% of global natural gas consumption, 40% of Western European consumption as of 2021, according to a Goldman Sachs note.

Italian steel pipe maker Tenaris surged 13.0%. With Russian steel exports expected to lose access to the European market, Jefferies sees a market opportunity for established producers like Tenaris and France’s Vallourec of about $200 million.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Vinay Dwivedi and Lisa Shumaker)

The Week Ahead – Russia Invasion Updates to Remain the Key Driver

On the Macro

It’s a quieter week ahead on the economic calendar, with 50 stats due out through the week ending 11th March. In the week prior, 79 stats had been in focus.

For the Dollar:

JOLT’s job openings will be in focus on Tuesday ahead of jobless claims and inflation on Thursday.

While jobless claims will draw interest, the inflation figures will be the key before next week’s FOMC policy decision.

On Friday, consumer sentiment figures are also due out and could shed some light on sentiment towards Russia’s invasion of Ukraine.

In the week ending 4th March, the Dollar Spot Index rallied by 2.10% to 98.648.

For the EUR:

German retail sales, factory orders, and industrial production will be the key stats of the week. Barring revisions to Eurozone 4th quarter GDP numbers, these should have a muted impact on the EUR.

On Thursday, the ECB press conference is the main driver. The markets will be looking for the ECB to deliver an impact analysis on the Russian invasion and sanctions on the Eurozone economy, financial sector, and monetary policy.

For the week, the EUR tumbled by 3.02% to $1.0928.

For the Pound:

Industrial and manufacturing production figures are due out along with trade data and 4th quarter GDP numbers. While the stats, due out on Friday, will draw interest, market risk sentiment will remain the key driver.

The Pound slid by 1.33% to end the week at $1.3230.

For the Loonie:

Trade data on Tuesday and employment figures on Friday will be in focus. Expect the employment numbers to be the key driver.

The Loonie ended the week down 0.14% to C$1.2731 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

Business and consumer confidence figures are due out on Tuesday and Wednesday. Both business investment and consumer spending are essential to economic recovery.

The Aussie Dollar rallied by 1.99% to $0.7370.

For the Kiwi Dollar:

It’s a quiet week ahead, with stats limited to electronic card retail sales and business PMI figures. We would expect electronic card retail sales to be the key.

News updates on the Omicron strain and economic data from China will also influence.

The Kiwi Dollar ended the week up by 1.74% to $0.6860.

For the Japanese Yen:

4th quarter GDP and household spending figures are due out. Barring revisions to prelim figures, expect household spending to garner greater interest.

Away from the economic calendar, market risk sentiment will remain the key driver, however.

The Japanese Yen rose by 0.63% to end the week at ¥114.820 against the U.S Dollar.

Out of China

Trade data is in focus on Monday ahead of inflation figures on Wednesday. With energy prices surging in response to Russia invading Ukraine, expect both sets of numbers to influence market risk sentiment.

In the week ending 4th March, the Yuan slipped by 0.03% to end the week at CNY6.3195 against the Dollar. The Yuan had risen by 0.58% to CNY6.3175 in the week prior.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, which will continue to overshadow economic data and central bank chatter once more.