British Midcaps Hit Record High; Equiniti Group Shines

By Devik Jain

The British outsourcer jumped 13.8% after U.S. private equity firm Siris Capital tabled a 624.3 million pounds ($864.59 million) bid in an all-cash deal.

The blue-chip index edged 0.1% higher in choppy trading, with gains being capped by a 0.8% decline in heavyweight energy shares as they tracked lower oil prices. [O/R]

AstraZeneca rose 0.4%, and was among the biggest boost to the FTSE 100 after the Philippines said it will resume administering drugmaker’s COVID-19 vaccine to people below 60 years of age.

The domestically focussed mid-cap FTSE 250 index also gained 0.4% to touch a record high.

“Markets are back to being a bit dull for now but pretty buoyant,” Deutsche Bank strategist Jim Reid wrote in a note.

“It’s a lighter week ahead, with the main highlight likely to be at the end of the week with the flash PMIs for April … And there’ll be particular attention on the price gauges as well as investors stay attuned to any signs of growing inflationary pressures.”

With the FTSE 100 gaining 8.7% year-to-date and UK vaccine rollout continuing to progress, markets will have a chance to gauge the impact on the economy as employment data, retail sales, CPI, PPI, and flash April PMIs are all due this week.

Meanwhile, homebuilders added 0.6% after property website Rightmove said advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax-cut for home-buyers last month.

Johnson Matthey rose 0.9% after the chemicals company signed a long-term agreement with Russian metals producer Nornickel for the supply of nickel and cobalt to produce materials used to make electric vehicle (EV) batteries.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)

The Week Ahead – Economic Data, Monetary Policy, and Geopolitics in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 45 stats in focus in the week ending 23rd April. In the week prior, 72 stats had been in focus.

For the Dollar:

After a quiet 1st half of the week, the weekly jobless claims figures on Thursday will influence.

Expect any increase in claims to test market risk appetite.

On Friday, prelim private sector PMI figures for April wrap things up. The services PMI will have the greatest impact on the markets.

In the week ending 16th April, the Dollar Spot Index fell by 0.66% to 91.556.

For the EUR:

It’s a quiet start to the week on the economic data front.

German wholesale inflation figures for March are due out on Tuesday. Increased market sensitivity to inflation will give the numbers greater attention than usual.

The focus will then shift to prelim April private sector PMIs for France, Germany, and the Eurozone on Friday.

On the monetary policy front, the ECB will also deliver its first monetary policy decision of the quarter on Thursday.

While the ECB is expected to stand pat on interest rates, updates on the bond purchasing program will be the main area of interest.

From the ECB press conference, views on the economic outlook will also need monitoring on the day.

At the end of the week, ECB President Lagarde will be back in action. Following the Thursday press conference, however, there shouldn’t be too many surprises.

The EUR ended the week up by 0.66% to $1.1977.

For the Pound:

It’s a busy week ahead on the economic calendar.

In the first half of the week, employment, wages, and inflation figures will be in focus.

Expect March claimant counts and annual rate of inflation to be the key drivers.

The focus will then shift to March retail sales and prelim private sector PMIs for April on Friday.

Expect the retail sales and services PMI figures to be the key drivers at the end of the week.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak on Wednesday. Expect any views on the economic outlook or monetary policy to influence.

The Pound ended the week up by 0.53% to $1.3779.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, March inflation figures will be in focus ahead of house price figures on Thursday.

Expect the inflation figures to be the key driver, with focus likely to be on the core inflation figures.

On the monetary policy front, the BoC is also in action on Wednesday. With the BoC expected to stand pat on policy, the monetary policy report will be the main area of focus.

The Loonie ended the week up 0.22% to C$1.2503 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

Prelim retail sales figures are due out on Wednesday. With consumption key to the economic recovery, expect plenty of sensitivity to the numbers.

On the monetary policy front, the RBA meeting minutes on Tuesday will also influence.

The Aussie Dollar ended the week up by 1.46% to $0.7734.

For the Kiwi Dollar:

It’s a quiet week ahead.

1st quarter inflation figures are due out on Wednesday.

Expect sensitivity to the numbers, with the markets having little else to consider in the week.

The Kiwi Dollar ended the week up by 1.55% to $0.7142.

For the Japanese Yen:

It is also a relatively quiet week ahead.

Early in the week, March trade data and finalized industrial production figures for February are due out.

Expect the trade data to have the greatest influence in the week.

At the end of the week, inflation figures for March and private sector PMIs will also draw interest. Expect the private sector PMI and services PMI in particular to have the greatest influence.

The Japanese Yen rose by 0.79% to ¥108.80 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead.

There were no material stats to provide the broader financial markets with direction in the week.

While there are no stats to consider, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave 1-year and 5-year loan prime rates unchanged.

The Chinese Yuan ended the week up by 0.49% to CNY6.5206 against the U.S Dollar.

Geo-Politics

U.S-China and U.S-Russia relations are the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

There are some big names on the docket in the week ahead…

From the U.S:

IBM (Mon), Coca Cola (Mon), Procter & Gamble (Tue), Netflix (Tue), Johnson & Johnson (Tue), and American Express (Fri).

From the EU:

Nestle (Thurs), Renault (Thurs), Daimler (Fri), and Software AG (Fri).

The Week Ahead – Economic Data, COVID-19, and Corporate Earnings in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 63 stats in focus in the week ending 16th April. In the week prior, 36 stats had been in focus.

For the Dollar:

After a quiet Monday, March inflation figures will get things going on Tuesday. In spite of the FED’s assurances of unwavering support, a pickup in inflationary pressure will be a test for the markets.

The focus will then shift to a particularly busy day on the economic calendar.

Key stats include March retail sales, jobless claims, and Philly FED Manufacturing PMI numbers.

Business inventory and industrial production figures are also due out but will likely have limited impact.

At the end of the week, prelim consumer sentiment figures for April will also draw attention on Friday.

In the week ending 9th April, the Dollar Spot Index slid by 0.92% to 92.163.

For the EUR:

It’s a relatively busy week ahead on the economic data front.

Early in the week, Eurozone retail sales and economic sentiment figures for Germany and the Eurozone will be in focus.

Expect Germany’s ZEW economic sentiment figures to have the greatest impact.

Mid-week, industrial production figures for the Eurozone.

Wrapping up the week, March inflation and trade data for the Eurozone will draw attention.

Other stats in the week include inflation figures for France, Germany, Italy, and Spain. We don’t expect the numbers to have an impact on the EUR, however.

The EUR ended the week up by 1.19% to $1.1899.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Retail sales figures are due out early Tuesday ahead of industrial and manufacturing production figures later in the day.

February trade figures will also be in focus on Tuesday. Expect more interest in the numbers, as the markets look for the effects of Brexit on trade terms.

The Pound ended the week down by 0.90% to $1.3707.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

The markets will have to wait until Thursday for manufacturing sales figures. With little else to consider, the numbers will draw attention ahead of wholesale sales numbers on Friday.

Mid-week, OPEC and the IEA’s monthly report, crude oil inventory numbers will also influence.

From the Bank of Canada, the Business Outlook Survey will provide direction at the start of the week.

Away from the economic calendar, expect economic data from China to also influence…

The Loonie ended the week up 0.38% to C$1.2530 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busier week ahead.

Key stats include business and consumer confidence figures in the 1st half of the week.

In the 2nd half of the week, March employment numbers are also due out.

Expect plenty of Aussie Dollar sensitivity to the numbers. Business investment and consumer spending are both key to the economic recovery. Any weakening in consumer or business confidence will test support for the Aussie Dollar.

Improving labor market conditions will also be a must.

The Aussie Dollar ended the week up by 0.17% to $0.7623.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

Key stats include electronic card retail sales and business PMI numbers.

While we can expect the numbers to influence, the RBNZ monetary policy decision is the main event of the week.

With the markets expecting the RBNZ to stand pat, the focus will be on the RBNZ Rate Statement.

The Kiwi Dollar ended the week up by 0.01% to $0.7033.

For the Japanese Yen:

It is a quiet week ahead.

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

The Japanese Yen rose by 0.92% to ¥109.67 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead.

Early in the week trade data for March will be in focus. Expect plenty of interest in the numbers. The markets will be looking for a sustained improvement in trade terms.

At the end of the week, 1st quarter GDP numbers and March industrial production figures will be in focus.

Other stats include retail sales, fixed asset investment, and unemployment figures. While the numbers tend to draw attention, 1st quarter GDP numbers will overshadow these stats at the end of the week.

The Chinese Yuan ended the week up by 0.22% to CNY6.5526 against the U.S Dollar.

Geo-Politics and COVID-19

U.S foreign policy will remain the main area of focus for the markets, with U.S – China relations key.

For the Eurozone, vaccination roll-outs and COVID-19 news updates will also be in focus in the week ahead.

Corporate Earnings

Earning season also kicks off in the week ahead.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are big names delivering results in the week

The Weekly Wrap – A Dovish FED Pegs Back the Greenback

The Stats

It was a relatively quiet week on the economic calendar, in the week ending 9th April.

A total of 36 stats were monitored, following 60 stats from the week prior.

Of the 36 stats, 23 came in ahead forecasts, with 11 economic indicators coming up short of forecasts. There were 2 stats that 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 12 stats, 11 reflected a deterioration from previous.

For the Greenback, it was a first weekly loss in 4-weeks. In the week ending 9th April, the Dollar Spot Index fell by 0.92% to 92.163. In the previous week, the Dollar had risen by 0.28% to 93.022.

A dovish FED left the Dollar in the red for the week.

Out of the U.S

It was a quieter week on the economic data front.

Key stats included service sector PMI, factory orders, and weekly jobless claim figures.

It was a mixed set of numbers for the Greenback.

The market’s preferred ISM Non-Manufacturing PMI rose from 55.3 to 63.7 in March. It was the only positive, however.

In February, factory orders fell by 0.8%, partially reversing a 2.7% rise from January.

Jobless claims figures were also disappointing, with initial jobless claims rising from 728k to 744k in the week ending 2nd April. Economists had forecast a fall to 680k.

Other stats in the week included JOLTs job openings, trade data, wholesale inflation, and Markit service PMIs.

These stats had a relatively muted impact on the Dollar and the broader markets, however.

On the monetary policy front, the FOMC meeting minutes reaffirmed FED Chair Powell’s stance on low for longer. Late in the week, Powell also delivered a speech talking of the need for unwavering monetary policy support.

In the equity markets, the NASDAQ rallied by 3.12%, with the Dow and the S&P500 gaining 1.95% and 2.71% respectively.

Out of the UK

It was a quiet week on the economic data front.

Finalized service and composite PMI numbers for March were in focus.

Downward revisions from prelim figures had a relatively muted impact on the Pound, however. Service sector and the broader private sector returned to growth in March, delivering Pound support.

Government plans on easing COVID-19 containment measures thanks to progress on the vaccination front also remained Pound positive.

In the week, the Pound fell by 0.90% to end the week at $1.3707. In the week prior, the Pound had risen by 0.31% to $1.3832.

The FTSE100 ended the week up by 2.65%, reversing a 0.05% loss from the previous week.

Out of the Eurozone

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

Mid-week, service sector PMIs for March were in focus after impressive manufacturing numbers from the week prior.

The stats were skewed to the positive, with only Italy reporting a decline in its services PMI.

For the Eurozone, the composite PMI increased from 48.8 to 53.2, which was up from a prelim 52.5. A return to growth across the private sector came in spite of containment measures across a number of Eurozone member states.

From Germany, factory orders, industrial production, and trade data were also in focus.

Orders rose for a 2nd consecutive month, albeit at a slower pace, driven by domestic demand.

Industrial production and trade data disappointed, however.

Industrial production fell by 1.6% in February, month-on-month, following a revised 2% decline in January. Economists had forecast a 1.5% rise.

In February, Germany’s trade surplus narrowed from €22.2bn to €19.1bn, versus a forecasted narrowing to €20.0bn.

On the monetary policy front, the ECB meeting minutes were also in focus. While highlighting downside risks to the economy near-term, optimism was evident over the medium-term outlook.

In line with Lagarde’s assurances from the press conference, the minutes revealed a plan to ramp up bond purchases in the near-term. The minutes did discussed a quarterly review, however…

For the week, the EUR rose by 1.19% to $1.1899. In the week prior, the EUR had fallen by 0.30% to $1.1759.

The DAX30 rose by 0.84%, with the CAC40 and EuroStoxx600 ended the week with gains of 1.09% and 1.16% respectively.

For the Loonie

It was a busier week.

Trade data for February and March Ivey PMI numbers were in focus mid-week.

The stats were mixed. While the Ivey PMI jumped from 60.0 to 72.9, the trade surplus narrowed from C$1.21bn to C$1.04bn.

At the end of the week, employment figures for March were more significant, however.

Employment surged by 303.1K at the end of the quarter, following an impressive 259.2k jump in February.

The unemployment rate fell from 8.2% to 7.5% as a result of the surge in hiring.

In the week ending 9th April, the Loonie rose by 0.38% to C$1.2530. In the week prior, the Loonie had fallen by 0.01% to C$1.2578.

Elsewhere

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

In the week ending 9th April, the Aussie Dollar rose by 0.17% to $0.7623, with the Kiwi Dollar ending the week up by 0.01% to $0.7033.

For the Aussie Dollar

It was a particularly quiet week.

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

While there were no stats, the RBA was in action early in the week.

In line with market expectations, the RBA stood pat on policy.

The Rate Statement talked of a hold on the cash rate until wage growth is substantially higher and inflation is sustainably within the 2% to 3% target range. According to the statement, the Board does not expect these conditions to be met until 2024 at the earliest.

For the Kiwi Dollar

It was also a particularly quiet week.

There were no material stats in the week to provide the Kiwi with direction.

For the Japanese Yen

It was a relatively quiet week.

At the start of the week, finalized service PMI figures were in focus. In March, the services PMI increased from 46.3 to 48.3, its highest reading since 2020.

In spite of the continued contraction, optimism hit its highest level since 2013 on vaccine hopes.

Household spending figures for February also provided some hope. Month-on-month, spending increased by 2.4%, partially reversing a 7.3% slump from January.

The Japanese Yen rose by 0.92% to ¥109.67 against the U.S Dollar. In the week prior, the Yen had fallen by 0.96% to ¥110.69.

Out of China

It was a relatively quiet week on the data front.

The Caixin Services PMI for March was in focus early in the week.

Following softer growth across the manufacturing sector, service sector activity picked up in March.

The Services PMI rose from 51.5 to 54.3.

At the end of the week, inflation figures also drew attention, with the PMI surveys highlighting a marked increase in input price.

In March, consumer prices fell by 0.5%, reversing a 0.6% increase in February. In spite of the fall in March, inflationary pressure returned. The annual rate of inflation accelerated from -0.2% to 0.4%. Economists had forecast consumer prices to fall by 0.4%, month-on-month, and to rise by 0.3% year-on-year.

Wholesale inflationary pressures surged at the end of the 1st quarter. The producer price index increased by 4.40%, year-on-year, which was well above a forecasted 3.5% increase. The PPI had risen by 1.7% in February.

In the week ending 9th April, the Chinese Yuan rose by 0.22% to CNY6.5526. In the week prior, the Yuan had fallen by 0.40% to CNY6.5670.

The CSI300 slid by 2.45%, with the Hang Seng ending the week down by 0.83%.

London Stocks Rise on Optimism Over Swift Economic Recovery

The blue-chip FTSE 100 index rose 0.3%, with industrials and consumer discretionary stocks, mainly BAE Systems Plc, Relx Plc, Next Plc and Compass group Plc, being the biggest gainers.

Mining stocks, including Rio Tinto, Anglo American and BHP, were also among the biggest boosts on the index.

Global equities crept higher on hopes of a stronger U.S. economy, as investors parsed details of a $2 trillion U.S. government spending plan and hoped for strong jobs data later in the week. [MKTS/GLOB]

The domestically focused mid-cap FTSE 250 index climbed 0.3%, led by industrials and real estate stocks.

Quilter rose 2.0%, after it agreed to sell its international business to specialist life assurance company Utmost Group for 483 million pounds ($664.37 million), as it sharpens its focus on its UK wealth management unit.

Fashion retailer Next rose 4.2%, even after it reported a halving in annual pretax profit after COVID-19 lockdowns closed its stores but raised its forecast for a big rebound this year.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Shailesh Kuber)

European Stocks Enter New Quarter with Small Gains, Chipmakers Rally

The pan-European STOXX 600 index rose 0.2% in early trading, hovering just 3 points below its all-time high. The benchmark ended the first quarter with a 7.7% rise – its fourth straight quarter of gains.

European chip companies including ASML, ASMI, Infineon Technologies BE Semiconductor all rose between 1.8% and 4.4% after U.S. chipmaker Micron Technology issued an upbeat revenue forecast.

Meanwhile, contract chipmaker TSMC said it plans to invest $100 billion over the next three years to increase capacity at its plants.

Wall Street stocks climbed overnight as investors pinned hopes on a strong U.S. economy as President Joe Biden unveiled a sweeping $2.3 trillion spending plan including investments in roads, railways, broadband, clean energy and semiconductor manufacture.

French retailers and travel stocks came under pressure after the latest lockdown. Hotels group Accor inched up 0.3%, while catering companies Sodexo and Elior dropped almost 2%.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu)

UK Economy Grew More than Thought at End of Miserable 2020

Gross domestic product increased by 1.3% between October and December last year from the previous three-month period, compared with an earlier estimate of 1.0% growth, the Office for National Statistics said.

Economists polled by Reuters had expected the growth rate to remain at 1.0%.

In 2020 as a whole, gross domestic product fell by 9.8%, slightly less sharp than an initial estimate of a 9.9% slump which was the biggest collapse in more than three centuries.

Britain’s economy suffered the biggest drop of all countries in the Organisation for Economic Co-operation and Development except for Argentina and Spain last year, OECD data has shown.

The ONS also said Britain’s current account deficit widened to 26.3 billion pounds in the fourth quarter, almost double the shortfall in the third quarter, as firms rushed to import goods before the Jan. 1 start to the country’s less open trade relationship with the European Union.

But the deficit – a long-standing concern for investors because it leaves Britain reliant on foreign inflows of cash – came in below forecasts of 33 billion pounds in the Reuters poll.

(Reporting by William Schomberg and Andy Bruce)

UK House Price Rise Slows Down in March, Nationwide Says

In February, prices had risen by an annual 6.9%, based on Nationwide’s measure.

In March alone, prices fell by 0.2% compared with a month-on-month rise of 0.7% in February.

A Reuters poll of economists had pointed to rise of 6.4% in annual terms and a 0.4% monthly increase.

Finance minister Rishi Sunak announced on March 3 that he would extend a tax break for buyers of residential properties and the launch of a new mortgage guarantee scheme.

Sunak introduced the tax cut last year as part of his emergency measures to help the economy cope with the shock of the coronavirus pandemic. Demand for bigger homes after the experience of lockdown has also drive a surge in activity in Britain’s housing market since last spring.

(Reporting by Andrew MacAskill, editing by Estelle Shirbon and Andy Bruce)

The Week Ahead – Economic Data, COVID-19, and China in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 54 stats in focus in the week ending 2nd April. In the week prior, 56 stats had also been in focus.

For the major markets, it is a shortened week, however, with Commonwealth, European, and U.S markets closed on Friday.

For the Dollar:

It’s another relatively busy week ahead, with some key stats for the markets to consider.

March consumer confidence figures get things going on Tuesday. Following the COVID-19 relief package, the markets will be looking for a continued uptrend in confidence to support consumption.

On Wednesday, ADP nonfarm employment change figures are due out ahead of a busy 2nd half of the week.

On Thursday, ISM Manufacturing PMI and weekly jobless claims are due out. Expect the jobless claims figures to garner plenty of interest.

Wrapping things up at the end of the week will be official labor market figures for March.

Expect nonfarm payrolls and the March unemployment rate to be the main areas of focus.

Away from the economic calendar, FOMC member commentary will also need monitoring. Any deviation from the script could test support for riskier assets.

In the week ending 26th March, the Dollar Spot Index rose by 0.92% to 92.766.

For the EUR:

It’s another busy week ahead on the economic data front.

Early in the week, French consumer spending and German unemployment figures will be in focus. Expect German unemployment figures to have the greatest impact on Wednesday. France has reintroduced lockdown measures that would mute the impact of any positive historical indicators.

On Thursday, manufacturing PMI figures for Italy and Spain and German retail sales numbers are due out.

Finalized Manufacturing PMIs for France, Germany, and the Eurozone are also due out.

Expect German retail sales and Italy and the Eurozone’s PMIs to have the greatest impact.

While the stats will certainly influence, the EUR could succumb to more downside should lockdown measures widen…

The EUR ended the week down by 0.92% to $1.1794.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Finalized 4th quarter GDP numbers are due out on Wednesday. Barring a marked deviation from prelim, however, the numbers are unlikely to have a material impact on the Pound.

On Thursday, finalized manufacturing PMI figures for March will also likely have limited influence.

Away from the economic calendar, updates on the government’s plans to ease lockdown measures will be key.

The Pound ended the week down by 0.60% to $1.3789.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

January GDP and February RMPI numbers on Wednesday will be the key drivers in the week.

Building permit figures on Thursday should have a muted impact on the Loonie ahead of Friday’s holiday.

Away from the economic calendar, crude oil inventory numbers will also influence.

The Loonie ended the week down 0.62% to C$1.2577 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busy week.

Private sector credit and building approvals are due out on Wednesday.

Expect private sector credit figures to have the greatest impact.

On Thursday, however, retail sales and trade figures for February will be the key drivers.

The Aussie Dollar ended the week down by 1.36% to $0.7637.

For the Kiwi Dollar:

It’s a quiet week ahead.

Building consents for February are due out on Tuesday.

We don’t expect too much influence from the numbers, however.

On Wednesday, business confidence figures for March will influence in a shortened week.

The Kiwi Dollar ended the week down by 2.30% to $0.7000.

For the Japanese Yen:

It is a busy week ahead.

On Tuesday, retail sales figures are due out ahead of industrial production figures on Wednesday.

Expect industrial production figures to draw greater interest.

Late in the week, Tankan survey figures for the 1st quarter and finalized manufacturing PMI numbers are due out on Thursday.

The markets will be looking for the Tankan surveys to point to improved manufacturing sector conditions.

The Japanese Yen fell by 0.70% to ¥109.64 against the U.S Dollar.

Out of China

It’s a relatively quiet week ahead.

March NBS private sector PMIs are due out on Wednesday ahead of the all-important Caixin Manufacturing PMI on Thursday.

Thursday’s numbers will have the greatest impact on market risk sentiment late in the week.

The Chinese Yuan ended the week down by 0.49% to CNY6.5411 against the U.S Dollar.

Geo-Politics

U.S Politics

Talks with China have resumed, which will bring chatter from both sides to the forefront from a market perspective.

Economic data from China has continued to impress and global trade terms will need to continue improving to support a more sustained global economic recovery.

Relations between China and the rest of the world will therefore need to materially improve to support this.

The latest spike in tension over Xinjiang cotton will need monitoring.

EU Politics

Tensions between Britain and the EU remain, in spite of the EU’s decision not to ban vaccine exports.

Any decision to block the exports of vaccines could lead to a UK response, however, and could also unravel the UK’s vaccination program.

The Weekly Wrap – Economic Data, COVID-19, and the Dollar Rebound

The Stats

It was a slightly busier week on the economic calendar, in the week ending 26th March.

A total of 56 stats were monitored, following 53 stats from the week prior.

Of the 56 stats, 34 came in ahead forecasts, with 22 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 35 of the stats reflected an upward trend from previous figures. Of the remaining 21 stats, 21 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive weekly in the green. In the week ending 26th March, the Dollar Spot Index rallied by 0.92% to 92.766. In the previous week, the Dollar had risen by 0.26% to 91.919.

Out of the U.S

While it was a busy week on the economic data front, though it was a quiet start to the week.

Prelim private sector PMIs for March were market positive, with the service PMI rising from 59.8 to 60.0. The Manufacturing PMI increased from 58.6 to 59.0.

Core durable goods orders disappointed, however, falling by 0.9% in February.

On Thursday, jobless claims figures reflected improvement in labor market conditions. In the week ending 19th February, initial jobless claims fell from 781k to 684k.

At the end of the week, the stats were skewed to the negative, however.

Inflationary pressures softened, with the Core PCE Price Index rising by 1.4% year-on-year in February. In January, the index had risen by 1.5%.

Personal spending slid by 1% in February, partially reversing a 3.4% jump from January.

Other stats included trade data and finalized consumer sentiment figures that had a muted impact on the Dollar.

On the monetary policy front, FED Chair Powell testimony also delivered Dollar support in the week.

In the equity markets, the NASDAQ fell by 0.58%, while the Dow and the S&P500 rose by 1.36% and by 1.57% respectively.

Out of the UK

It was a busy week on the economic data front.

Employment figures delivered mixed results early in the week.

While the unemployment rate fell from 5.1% to 5.0% in January, claimant counts increased by 86.6k in February. In January, claimant counts had fallen by 20.8k.

Mid-week, inflation figures showed that inflationary pressures had softened in February.

The annual rate of inflation eased from 0.7% to 0.4% in February.

While inflation figures disappointed, private sector PMIs impressed.

In March, the services PMI jumped from 49.5 to 56.8, with the manufacturing PMI rising from 55.1 to 57.9.

The numbers follow the BoE’s monetary policy decision and optimistic outlook from the week prior.

At the end of the week, retail sales figures were largely better than expected.

Core retail sales increased by 2.4% in February, partially reversing an 8.8% slide from January.

Retail sales increased by 2.1%, partially reversing an 8.2% slide from January.

Year-on-year, however, retail sales and core retail sales remained in the red mid-way through the quarter.

Core retail sales fell by 1.1% year-on-year, with retail sales sliding by 3.7%, year-on-year.

In the week, the Pound fell by 0.60% to end the week at $1.3789. In the week prior, the Pound had fallen by 0.37% to $1.3872.

The FTSE100 ended the week up by 0.48%, partially reversing a 0.78% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Private sector PMIs and German consumer and business sentiment figures were on focus.

It was an impressive set of numbers from Eurozone member states.

The Eurozone’s Services PMI increased from 45.7 to a 7-month high 48.8 in March, according to prelim figures versus a forecasted 46.0.

In March, the Eurozone’s Manufacturing PMI rose from 57.9 to a record high 62.4 versus a forecasted 57.7.

The pickup in the Eurozone PMI numbers came off the back of a marked pickup in private sector PMI numbers from France and Germany.

Germany’s manufacturing PMI jumped from 60.7 to a record high 66.6, with the services sector returning to growth.

German Consumer and Business Confidence

For April, Germany’s GfK Consumer Climate Index rose from -12.7 to -6.2.

A marked increase in income expectations, which hit a 12-month high, supported the jump in confidence.

On the business front, Germany’s IFO Business Climate Index increased from a revised 92.7 to 96.6.

Supporting the uptick in the headline figures was a jump in the business expectations sub-index from a revised 94.2 to 100.4.

The current assessment sub-index was also on the rise, increasing from 90.6 to 90.3.

While the stats were skewed to the positive, a spike in new COVID-19 cases weighed on the EUR. The reintroduction of lockdown measures in some member states raised concerns over the economic outlook.

In the week, the ECB’s Economic Bulletin also talked of possible risks to the recovery. The Bulletin talked of vaccination rates, new cases, and containment measures, which coincided with the rising new cases across the bloc.

For the week, the EUR slid by 0.92% to $1.1794. In the week prior, the EUR had fallen by 0.41% to $1.1904.

The CAC40 fell by 0.15%, while the DAX30 and EuroStoxx600 ended the week gains of 0.88% and 0.85% respectively.

For the Loonie

It was a quiet week, with no material stats to provide the Loonie with direction.

The lack of stats left the Loonie in the hands of market risk sentiment and crude oil inventories and news.

In the week ending 26th March, the Loonie fell by 0.62% to C$1.2577. In the week prior, the Loonie had slipped by 0.20% to C$1.2500.

Elsewhere

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

In the week ending 26th March, the Aussie Dollar fell by 1.36% to $0.7637, with the Kiwi Dollar ending the week down by 2.30% to $0.7000.

For the Aussie Dollar

It was another quiet week.

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

A lack of stats left the Aussie Dollar in the hands of yield differentials and market risk sentiment.

For the Kiwi Dollar

It was a relatively quiet week.

February trade figures were in focus mid-week.

Month-on-month, the New Zealand trade balance rose from a NZ$647m deficit to a NZD181m surplus.

Year-on-year, however, the trade surplus narrowed from NZ$2,730m to NZ$2,360m.

  • The value of goods exported fell NZ$416m compared with the same period last year.
  • Exports were down to all New Zealand’s top trading partners, with the exception of China.
  • To China, exports increased NZ$369m from February 2020.
  • Weaker dairy sales weighed on overall exports in February.
  • The value of imports fell by NZ$46m to $4.3bn in February 2021.

For the Japanese Yen

It was a relatively busy week.

Prelim private sector PMI figures for March were in focus mid-week ahead of inflation figures on Friday.

The stats were skewed to the positive, with Japan’s manufacturing PMI rising from 51.4 to 52.0.

For the services sector, the PMI increased from 46.3 to 46.5.

On the inflation front, deflationary pressures eased in March. Year-on-year, Tokyo core consumer prices fell by 0.1% after having fallen by 0.3% in February.

Ultimately, the stats had a muted impact on the Japanese Yen, however.

The Japanese Yen fell by 0.70% to ¥109.64 against the U.S Dollar. In the week prior, the Yen had risen by 0.14% to ¥108.88.

Out of China

It was a quiet week on the data front.

There were no material stats to provide the markets with direction in the week.

On the monetary policy front, the PBoC left loan prime rates unchanged, which was in line with expectations.

The lack of stats left the markets to focus on geopolitics and China’s reaction vis-a-vis forced labor in the Xinjiang region.

In the week ending 26th March, the Chinese Yuan fell by 0.49% to CNY6.5411. In the week prior, the Yuan had fallen by 0.01% to CNY6.5090.

The CSI300 rose by 0.62%, while the Hang Seng ending the week down by 2.26%.

UK Shares Fall as Rising COVID-19 Cases in Europe Spur Recovery Worries

The blue-chip FTSE 100 index was down 0.6%, with bank stocks including HSBC Holdings, Barclays Plc, and Lloyds Banking Group falling between 1% and 1.5%.

Oil heavyweights BP Plc and Royal Dutch Shell Plc were also among the biggest laggards.

British consumer price inflation fell to 0.4% in February from 0.7% in January, reflecting unusual patterns of clothing discounts, official figures showed, versus forecasts in a Reuters poll for it to edge up to 0.8%.

The domestically focused mid-cap FTSE 250 index fell 0.3%, dragged down by industrials stocks.

Housebuilder Bellway Plc shed 0.4%, after reporting a 4% fall in pre-tax profit for the six months to Jan. 31.

Holiday company TUI gained 0.8%, despite saying it would shut 48 retail stores across Britain, adding to the 166 it had already closed there during the pandemic.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Subhranshu Sahu)

European Stocks Hit Two-Week low ahead of PMI data

The pan-regional STOXX 600 index fell 0.6% by 0810 GMT after the prospect of U.S. tax hikes to pay for the large stimulus package spooked Wall Street overnight. [.N]

Meanwhile, the European Union is set to extend COVID-19 vaccine export curbs to Britain and other areas with much higher vaccination rates, and to cover instances of companies backloading contracted supplies, EU officials said.

All eyes will turn to IHS Markit’s March business surveys for the euro zone and the United Kingdom.

Chipmakers, including ASM International, ASML and BE Semiconductor, were the top gainers on STOXX 600, up between 3% and 5.3% after U.S. firm Intel Corp announced a $20 billion plan to expand its advanced chip manufacturing capacity.

Banks, retailers and travel stocks declined the most on recovery worries.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

The Week Ahead – Private Sector PMIs, COVID-19, and Central Bank Commentary in Focus

On the Macro

It’s a relatively busy week ahead on the economic calendar, with 54 stats in focus in the week ending 26th March. In the week prior, 53 stats had been in focus.

For the Dollar:

It’s a busy week ahead.

The markets will have to wait until Wednesday, however, for core durable goods and prelim private sector PMIs.

While core durable goods orders will influence, prelim March Services PMI figures will be the key driver.

The focus will then shift to finalized 4th quarter GDP and initial jobless claim figures on Thursday.

Expect the jobless claims to have the greatest impact. Powell and team have already talked up the economic recovery for 2021.

At the end of the week, inflation and personal spending figures for February wrap things up.

Other stats in the week include housing sector, trade, and finalized consumer sentiment figures. We don’t expect too much influence from the numbers, however.

On the monetary policy front, FED Chair Powell is in action through the first half of the week.

A scheduled speech on Monday precedes two days of testimony on Tuesday and Wednesday. Expect any deviation from last week’s script to influence.

In the week ending 19th March, the Dollar Spot Index rose by 0.26% to 91.919.

For the EUR:

It’s a busier week ahead on the economic data front.

After a quiet start, prelim private sector PMI figures for France, Germany, and the Eurozone will be in focus on Wednesday.

While Germany’s manufacturing PMI will be the key driver, service sector PMIs will also influence.

Late in the day on Wednesday, Eurozone consumer confidence figures for March will also draw attention.

On Thursday and Friday, consumer confidence and business confidence figures from Germany are due out.

From the ECB, the Economic Bulletin on Thursday will also draw plenty of attention. The markets will be looking for any shift in the ECB’s outlook on the economic recovery.

On the monetary policy front, ECB President Lagarde is also scheduled to speak on Thursday. With climate change the topic, however, any talk on monetary policy is unlikely.

The EUR ended the week down by 0.41% to $1.1904.

For the Pound:

It’s a particularly busy week ahead on the economic calendar.

In the first half of the week, employment, inflation, and prelim private sector PMIs will be in focus.

Expect claimant counts, the service sector PMI, and inflation to draw plenty of interest.

At the end of the week, February retail sales figures will wrap things up. Another dive in spending would pressure the Pound.

On the monetary policy front, BoE Governor Bailey speaks in the week. Following last week’s unanimous vote to hold policy unchanged, any hawkish chatter should support the Pound.

The Pound ended the week down by 0.37% to $1.3872.

For the Loonie:

It’s a particularly quiet week ahead on the economic calendar. There are no material stats to provide the Loonie with direction.

For the Loonie, the lack of stats will leave crude oil inventories and market risk sentiment to provide direction.

BoC Governor Macklem is also scheduled to speak. Any surprise talk of a shift in policy would impact the Loonie.

The Loonie ended the week down 0.20% to C$1.2500 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week.

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 private sector PMIs from Europe and the U.S.

The Aussie Dollar ended the week down by 0.28% to $0.7742.

For the Kiwi Dollar:

It’s yet another quiet week ahead.

Economic data is limited to February trade data due out on Wednesday.

Following impressive numbers from China, the markets will be looking for strong exports to China.

Expect disappointing numbers to test Kiwi Dollar support.

From elsewhere, prelim private sector PMIs from Europe and the U.S will also influence.

The Kiwi Dollar ended the week down by 0.15% to $0.7165.

For the Japanese Yen:

It is relatively quiet week ahead.

Mid-week, prelim private sector PMIs for March are due out. Expect the manufacturing numbers to draw the greatest interest.

At the end of the week, March inflation figures for Tokyo will likely have a muted impact on the Yen and market risk sentiment.

The Japanese Yen rose by 0.14% to ¥108.88 against the U.S Dollar.

Out of China

It’s a quiet week ahead, with no material stats due out of China to provide the broader markets with direction.

While there are no stats, the PBoC is in action on Monday, though loan prime rates are likely to be left unchanged.

The Chinese Yuan ended the week down by 0.01% to CNY6.5090 against the U.S Dollar.

Geo-Politics

U.S Politics

Talks with China have resumed, which will bring chatter from both sides to the forefront from a market perspective.

Economic data from China has continued to impress and global trade terms will need to continue improving to support a more sustained global economic recovery.

Relations between China and the rest of the world will therefore need to materially improve to support this.

EU Politics

Some EU member states have resumed vaccinations with the AstraZeneca vaccine. Tensions between Britain and the EU remain, however.

The continued blocking exports of the vaccine from EU member states to non-EU countries could become a greater concern.

The Weekly Wrap – Monetary Policy, Economic Data, and COVID-19 Dictated Market Direction

The Stats

It was a slightly busier week on the economic calendar, in the week ending 19th March.

A total of 53 stats were monitored, following 45 stats from the week prior.

Of the 53 stats, 23 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There were 7 stats that were in line with forecasts in the week.

Looking at the numbers, 23 of the stats reflected an upward trend from previous figures. Of the remaining 30 stats, 25 reflected a deterioration from previous.

For the Greenback, it was back into the green to mark a 3rd weekly gain in 4-weeks. In the week ending 19th March, the Dollar Spot Index rose by 0.26% to 91.919. In the previous week, the Dollar had fallen by 0.33% to 91.679.

Out of the U.S

It was a busier week on the economic data front.

Key stats included retail sales and industrial production figures in the first half of the week.

The stats were skewed to the negative with retail sales taking a hit in February and industrial production hitting reverse.

On Thursday, jobless claims figures also disappointed, while Philly FED Manufacturing numbers for March impressed.

Initial jobless claims rose from 725k to 770k in the week ending 12th March.

Impressive numbers from Philly softened the blow, with the index surging to a 50-year high 51.8 in March.

While the stats drew plenty of attention, the FED monetary policy decision, press conference, and FOMC projections were the main event.

FED Chair Powell continued to stand by his promise of low for longer, with projections pointing to no likely rate hike until at least 2023.

This was in spite of a forecasted surge in economic growth and a bounce back in inflation.

In the equity markets, the Dow fell by 0.46, with the S&P500 and the NASDAQ declining by 0.77% and by 0.79% respectively.

Out of the UK

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

There were no material stats to provide the Pound with direction in the week.

On the monetary policy front, however, the BoE delivered a hawkish economic outlook.

While there were no dissents amongst MPC members, an optimistic economic outlook could mean that the BoE may well avoid negative rates. At least for now…

In the week, the Pound fell by 0.37% to end the week at $1.3872. In the week prior, the Pound had risen by 0.60% to $1.3924.

The FTSE100 ended the week down by 0.78%, partially reversing a 1.97% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front, with the German and Eurozone economies back in focus.

Early in the week, ZEW Economic Sentiment figures for Germany and the Eurozone drew attention.

Germany’s Economic Sentiment Index rose from 71.2 to 76.6, with the Eurozone’s climbing from 69.6 to 74.0.

Wage growth figures for the Eurozone were also positive for the EUR, while trade data disappointed.

In January, the Eurozone’s trade surplus narrowed from €29.2bn to just €6.3bn.

At the end of the week, German wholesale inflation figures delivered some support.

Other stats in the week included finalized inflation figures for France, Italy, and the Eurozone. These had a muted impact on the EUR and the European majors, however.

For the week, the EUR fell by 0.41% to $1.1904. In the week prior, the EUR had risen by 0.32% to $1.1953.

For the European major indexes, it was mixed week.

The CAC40 fell by 0.80%, while the DAX30 and EuroStoxx600 ended the week gains of 0.82% and 0.06% respectively.

For the Loonie

It was a relatively quiet week.

Key stats included February inflation and January retail sales figures.

The stats were skewed to the negative, with inflationary pressures softening and retail sales falling once more.

Other stats in the week included housing starts and manufacturing sales figures. These had a muted impact on the Loonie, however.

In the week ending 19th March, the Loonie fell by 0.20% to C$1.2500. In the week prior, the Loonie had rallied by 1.45% to C$1.2465.

Elsewhere

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

In the week ending 19th March, the Aussie Dollar fell by 0.28% to $0.7742, with the Kiwi Dollar ending the week down by 0.15% to $0.7165.

For the Aussie Dollar

It was another quiet week.

February employment and prelim retail sales figures were in focus through the second half of the week.

It was a mixed bag for the Aussie Dollar. While employment figures impressed, retail sales figures disappointed.

Full employment rose by 89.1k, leading to a fall in the unemployment rate to 5.8%.

While labor market conditions improved, retail sales fell by 1.1% in February, according to prelim figures.

With consumption key to the economic recovery, the weak numbers pinned the Aussie Dollar back on Friday.

On the monetary policy front, the RBA meeting minutes were also in focus. While members were more optimistic about the economic recovery, there was no talk of a shift in policy.

Based on member outlooks, the minutes pointed to a hold on policy until 2024.

For the Kiwi Dollar

It was a particularly quiet week.

4th quarter GDP numbers were in focus in the 2nd half of the week.

The New Zealand economy contracted by 1% in the 4th quarter. After having rebounded by 13.9% in the 3rd quarter, a lack of international tourists weighed on the economy in the final quarter of 2020.

In spite of the disappointing numbers, impressive stats from China delivered support in the week.

For the Japanese Yen

It was a busier week.

February trade data drew interest on Wednesday ahead of February inflation figures on Friday.

The stats were positive for the Japan economy.

Deflationary pressures eased in February, with Japan’s trade balance rising from a ¥325.4bn deficit to a ¥217.4bn surplus.

On the monetary policy front, the BoJ was also in action on Friday. After having avoided the need to drop rates deeper into negative territory, the Bank of Japan removed language relating to its ¥6tn average equity purchases from the policy statement.

The Bank also said that it would permit more shifts in 10-year yields

While a number of central banks are looking to avoid taper tantrums, there was no major reaction to the BoJ shift. On the day, the Japanese Yen rose by just 0.01%.

The Japanese Yen rose by 0.14% to ¥108.88 against the U.S Dollar. In the week prior, the Yen had fallen by 0.66% to ¥109.03.

Out of China

It was a busier week on the data front.

Industrial production, fixed asset investment, retail sales, and unemployment figures for February were in focus.

The stats were impressive, delivering support to riskier assets in the week.

Industrial production jumped by 35.1%, with fixed asset investments surging by 35.0% year-on-year.

Retail sales figures were as impressive, rising by 33.8% year-on-year.

The only blemish was the unemployment rate, which ticked up from 5.2% to 5.5%.

In the week ending 19th March, the Chinese Yuan fell by 0.01% to CNY6.5090. In the week prior, the Yuan had fallen by 0.18% to CNY6.5084.

The CSI300 fell by 2.71%, while the Hang Seng ending the week up by 0.87%.

Brexit Won’t Mean Lower Capital for Insurers, Says Bank of England

By Huw Jones

Britain’s exit from European Union has prompted the government to review insurance capital rules inherited from the bloc, raising industry hopes of less burdensome requirements.

Woods, who also heads the BoE’s Prudential Regulation Authority, which regulates Britain’s top banks and insurers, played down any such expectations.

“Now that we have left the EU we have no interest whatsoever in lowering levels of resilience or policyholder protection, but we can and should make changes to tailor regulation so it fits our market better and is more efficient and coherent,” Woods told the Association of British Insurers (ABI).

The ABI said last month that 35 billion pounds ($48.4 billion) of capital locked in by the risk margin element in capital rules known as Solvency II, could be used to increase investment in the UK economy and tackle climate change.

The risk margin is an extra layer of capital insurers must hold as a safety buffer in case they get into trouble.

However, Woods said he had doubts “about a reform package which materially decapitalises the insurance sector,” adding: “While it’s natural for the private sector to focus on private interests, it’s part of our job to keep an eye on the potential public costs of significant insurance failures.”

He was “wary” of cutting capital requirements on ‘green’ or climate-friendly investments.

Regulators face calls to have a remit to keep the City globally competitive. It is “not normal” for prudential regulators to have an actual competitiveness objective, which could be seen internationally as an intention to weaken UK regulation, Woods said.

“Loading something up with ever more objects is an excellent way to decorate your Christmas tree, but it’s not the best way to create an effective regulator,” Woods said.

(Reporting by Huw Jones; editing by John Stonestreet and Ed Osmond)

 

Stocks Keep Spirits up Before Fed Meets

By Ritvik Carvalho

European shares extended a rally that began on Wall Street on Monday and continued into Asia, with the pan-region STOXX 600 index up 0.5%. On Monday, the index touched its highest level in more than a year before ending flat.

Britain’s FTSE 100 index rose 0.7%, Germany’s DAX 0.6%, France’s CAC 40 0.2% and Italy’s FTSE MIB index 0.6%.

E-mini futures for the S&P 500 hit a record high before trading flat on the day.

MSCI’s All Country World Index, which tracks stocks across 49 countries, rose 0.2% to its highest levels since Feb 25.

An index of Asia-Pacific share markets excluding Japan gained 0.65%, led by a 0.8% jump in Australia’s benchmark S&P/ASX 200 index.

Japan’s Nikkei 225 gained 0.5% to just below the 30,000 mark. The broader Topix added 0.65%.

China’s blue-chip CSI 300 index climbed 0.87% and Hong Kong’s Hang Seng gained 0.67%.

“The stock markets have kept their spirits up ahead of tomorrow’s important Fed announcement,” said Karl Steiner, chief quantitative strategist at SEB.

On Monday, the S&P 500 and Dow Jones Industrial Average both soared on gains in travel stocks as mass vaccinations in the United States and congressional approval of a $1.9 trillion aid bill fueled investor optimism.

Longer-term U.S. Treasury yields slipped further on Tuesday, as the market looked ahead to government debt auctions and the Fed’s two-day policy meeting, which will conclude on Wednesday.

The benchmark 10-year yield, which reached a more than one-year high of 1.642% last week, was back at 1.6004%.

The earlier surge in yields stemmed from investors speculating that rising inflation expectations could prompt the Federal Open Market Committee to signal it will start raising rates sooner than expected.

“We think the FOMC will have a hard time expressing concern about asset markets with the S&P at an all-time high on 12 March, despite 10Y U.S. Treasury yields at post-February 2020 highs,” said analysts Steve Englander and John Davies at Standard Chartered.

“Focus has been on the FOMC ‘dot plot’ in recent days, but if the FOMC and Fed Chair (Jerome) Powell do not push back against current yield levels, investors are likely to take yields higher as better data arrives.”

Fed policymakers are expected to forecast that the U.S. economy will grow in 2021 by the fastest rate in decades, as it recovers from a coronavirus-stricken 2020.

The Bank of England also meets this week on Thursday and the Bank of Japan wraps up a two-day meeting on Friday.

On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite remained unchanged.

Airline shares rose as the companies pointed to concrete signs of an industry recovery as vaccine rollouts help spur leisure bookings.

The outlook for post-pandemic recoveries continued to diverge between the U.S. and Europe.

President Joe Biden’s order to make vaccination available to all adults by May 1 contrasted with stuttering rollouts in Germany, France and elsewhere, where use of the AstraZeneca vaccine has been suspended amid concern over possible side effects.

However, Kyle Rodda, an analyst at IG Markets, said the prospect of a slower economic recovery in Europe didn’t appear to be a major handicap for investors.

“It doesn’t seem to be the view that this is a real risk,” he said. “Investors are wary, but not worried.”

In currencies, the U.S. dollar held small gains from overnight, with caution evident ahead of the central bank meetings.

The dollar was largely flat at 109.19 yen, after rising as high as 109.365 on Monday for the first time since June.

The euro was little changed at $1.1930, holding for an eighth session below the $1.20 level.

Bitcoin halted its slide from a record high of $61,781.83 reached on Saturday, last trading 1% higher on the day around $56,250.

U.S. West Texas Intermediate crude for April changed hands at $64.74 a barrel, down 1%. Brent crude futures for May stood at $68.22 a barrel, losing 1%.

(This story corrects U.S. 10-year Treasury yield to 1.6004%)

(Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland and Kane Wu in Tokyo; editing by Larry King)

The Week Ahead – Economic Data, the BoE, and the FED in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 49 stats in focus in the week ending 19th March. In the week prior, 45 stats had been in focus.

For the Dollar:

It’s a busier week ahead.

NY Empire State manufacturing numbers get things going on Monday.

The focus will then shift to February retail sales and industrial production figures on Tuesday.

With consumption a key area of focus, expect the retail sales figures to have a greater impact.

On Thursday, the weekly jobless claim and Philly FED Manufacturing PMI numbers will also draw attention.

Other stats include housing, import and export price, and business inventory numbers. We would expect these to have a muted impact on the Dollar, however.

While the stats will influence, the FED monetary policy decision on Wednesday will be the main event.

Following reflationary fears, the FOMC projections will be key, barring an unexpected move by the FED.

The Dollar Spot Index ended the week down by 0.33% to 91.679.

For the EUR:

It’s a quieter week ahead on the economic data front.

ZEW Economic Sentiment figures for Germany and the Eurozone will influence on Tuesday. We’ve seen greater sensitivity to the ZEW numbers of late.

On Wednesday, finalized inflation figures for the Eurozone are due out. Barring upward revisions, however, the numbers should have a relatively muted impact on the EUR.

In the 2nd half of the week, Eurozone trade data and wage growth figures and German wholesale inflation numbers will be in focus.

Barring particularly dire figures, however, we don’t expect too much impact from trade and wage growth figures.

Away from the economic calendar, a new spike in COVID-19 cases and new containment measures could test EUR support early in the week.

The EUR ended the week up by 0.32% to $1.1953.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar.  There are no material stats to provide the Pound with direction in the week.

While there are no stats, the BoE is in action on Thursday, however.

Expect plenty of movement before, during, and after.

The markets will be looking to get the BoE’s view on inflation and the economic outlook. A shift in monetary policy had been on the cards after the review of negative rates…

The Pound ended the week up by 0.60% to $1.3924.

For the Loonie:

It’s a busier week ahead on the economic calendar.

Early in the week, housing starts and manufacturing sales figures are due out.

We don’t expect too much influence, however, with data from China likely to garner more interest.

Mid-week, February inflation figures will provide the Loonie with direction ahead of retail sales figures on Friday.

While it’s a busier economic calendar, expect crude oil inventory numbers to also continue to influence.

The Loonie ended the week up by 1.45% to C$1.2475 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another quiet week.

The markets will have to wait until Thursday for February employment figures.

With consumption key to the continued economic recovery, labor market conditions will need to continue improving to support growth.

From elsewhere, economic data from China will also provide direction at the start of the week.

The Aussie Dollar ended the week up by 1.01% to $0.7764.

For the Kiwi Dollar:

It’s another quiet week ahead.

Economic data is limited to 4th quarter GDP numbers due out on Thursday.

With the markets having already seen 4th quarter numbers from other key economies, expect Kiwi Dollar sensitivity to the numbers.

From elsewhere, stats from China will also be key in the early part of the week.

Private sector PMI figures for February had shown slower growth across the private sector. Disappointing industrial production figures from China could test support for riskier assets early in the week.

The Kiwi Dollar ended the week up by 0.13% to $0.7176.

For the Japanese Yen:

It is busier quiet week ahead.

Early in the week, industrial production figures for January are due out ahead of trade data for February.

At the end of the week, February inflation figures will also draw interest.

On the monetary policy front, the BoJ is in action on Friday, though the markets are not expecting much…

The Japanese Yen ended the week down by 0.66% to ¥109.03 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead.

A Monday data dump will set the tone for the week.

Industrial production, fixed asset investment, retail sales, and unemployment figures are due out.

Expect plenty of interest in the numbers, particularly following the softer PMI numbers for February. Impressive trade data has raised the bar…

The Chinese Yuan ended the week down by 0.18% to CNY6.5084 against the U.S Dollar.

Geo-Politics

U.S Politics

With Biden delivering the long-awaited relief package, the focus could now shift to foreign policy.

China, Iran, and Russia will likely be key areas of focus for the U.S administration near-term.

EU Politics

Following Britain’s withdrawal from the EU, tension continues to simmer. COVID-19 vaccine issues haven’t helped. With some EU member states halting the use of the AstraZeneca vaccine tensions may yet rise further…

The Weekly Wrap – Positive Economic Data, the ECB, and the U.S Relief Package Were in Focus

The Stats

It was a quieter week on the economic calendar, in the week ending 12th March.

A total of 45 stats were monitored, following 70 stats from the week prior.

Of the 45 stats, 24 came in ahead forecasts, with 17 economic indicators coming up short of forecasts. There were 4 stats that were in line with forecasts in the week.

Looking at the numbers, 23 of the stats reflected an upward trend from previous figures. Of the remaining 22 stats, 18 reflected a deterioration from previous.

For the Greenback, it was back into the red, following 2 consecutive weekly gains. In the week ending 12th March, the Dollar Spot Index fell by 0.33% to 91.679. In the previous week, the Dollar had rallied by 1.17% to 91.940.

Out of the U.S

It was a quieter week on the economic data front.

Key stats included inflation, jobless claims, and consumer sentiment figures.

The stats were skewed to the positive.

While inflationary pressures softened in February, initial jobless claims fell back from 754k to 712k in the week ending 5th February.

The annual rate of core inflation eased from 1.4% to 1.3% in February.

JOLTs job openings were also positive for January, with openings rising from 6.752m to 6.917m.

At the end of the week, the Michigan Consumer Sentiment Index rose from 76.8 to 83.0.

In the equity markets, the Dow rallied by 4.07, with the S&P500 and the NASDAQ rising by 3.09% and by 2.64% respectively.

The passing of the $1.9 trillion through the House coupled with positive stats supported the markets.

Out of the UK

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

In the 1st half of the week, stats included retail sales figures for February.

A 9.5% increase in retail sales, year-on-year, according to the BRC, provided Pound support.

At the end of the week, GDP and manufacturing and industrial production figures drew interest.

Manufacturing production and industrial production fell by 2.3% and by 1.5% respectively in January. Production had seen minor increases in December.

The UK economy also contracted in January, after having returned to growth in December.

Month-on-month, the economy contracted by 2.9%, reversing growth of 1.2% from December. Year-on-year, the economy contracted by 9.2% after having contracted by 8.6% in December.

Trade data was Pound positive, with the trade deficit narrowing.

In January, the UK trade deficit narrowed from £14.32bn to £9.83bn.

The Non-EU trade deficit narrowed from £5.2bn to £1.76bn

In the week, the Pound rose by 0.60% to end the week at $1.3924. In the week prior, the Pound had fallen by 0.68% to $1.3838.

The FTSE100 ended the week up by 1.97%, following a 2.27% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front, with the German and Eurozone economies in focus.

Early in the week, German industrial production and trade data were in focus.

Industrial production slid by 2.5% in January, while Germany’s trade surplus widened from €16.4bn to €22.2bn.

Following impressive manufacturing PMIs from Germany early in the year, the markets were able to brush aside the weak production numbers.

For the Eurozone, 4th quarter GDP numbers also had a muted impact on the majors on Tuesday.

At the end of the week, Eurozone industrial production figures beat forecasts, with production rising by 0.8%. In December, production had fallen by a revised 0.1%.

Other stats in the week included French nonfarm payrolls and finalized inflation figures for Germany and Spain. These had a muted impact on the majors, however.

On the monetary policy front, the ECB monetary policy decision was the main event of the week. In line with market expectations, the ECB left policy unchanged.

Supporting the European majors, however, the ECB vowed to ramp up bond purchases in response to rising borrowing costs.

For the week, the EUR rose by 0.32% to $1.1953. In the week prior, the EUR had fallen by 1.32% to $1.1916.

For the European major indexes, it was bullish week. The CAC40 and DAX30 rallied by 4.56% and by 4.18% respectively. The EuroStoxx600 ended the week with a more modest 3.56% gain.

For the Loonie

It was a relatively quiet week.

On the economic data front, the markets needed to wait until Friday for the numbers.

Employment jumped by 259.2k in February, reversing a 212.8k slide in January. As a result, the unemployment rate fell from 9.4% to 8.2%.

Wholesale sales figures for January were also out on Friday but had a muted impact on the Loonie.

On the monetary policy front, the Bank of Canada was in action on Wednesday. In line with market expectations, the BoC left rates unchanged. The Rate Statement suggested a hold on policy until 2023, however.

While the statement was dovish, economic data from China and a pickup in crude oil prices delivered for the Loonie.

In the week ending 12th March, the Loonie rallied by 1.45% to C$1.2475. In the week prior, the Loonie had fallen by 0.60% to C$1.2650.

Elsewhere

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

In the week ending 12th March, the Aussie Dollar rose by 1.01% to $0.7764, with the Kiwi Dollar ending the week up by 0.13% to $0.7176.

For the Aussie Dollar

It was a quiet week.

Business and consumer confidence figures were in focus in the week, with the stats delivering Aussie Dollar support.

The NAB Business Confidence Index rose from 10.0 to 16.0, with the Westpac Consumer Sentiment Index increasing by 2.6%.

With both business investment and consumer spending key to a sustained economic recovery, the numbers will have provided some comfort to the RBA.

For the Kiwi Dollar

It was also a quiet week.

Electronic card retail sales and business PMI figures for February were in focus.

The stats were skewed to the negative.

Card retail sales fell by 2.5% in February, following a 0.3% decline in January.

The Business PMI fell from 57.5 to 53.4 in February, after having bounced back from a December 48.7.

Lockdown measures reintroduced in mid-Feb were a contributory factor, easing the impact on the Kiwi.

For the Japanese Yen

It was another relatively busy week.

Household spending and 2nd estimate GDP figures for the 4th quarter were in focus.

In January, household spending slid by 7.3%, reversing a 0.9% increase from December.

Year-on-year, spending was down 6.1%. In December, spending had been down by a modest 0.6%.

2nd estimate GDP numbers also disappointed. In the 4th quarter, the economy expanded by 2.8%, down from a 1st estimate 3.0%. Year-on-year, the economy expanded by 11.7%. This was down from a 1st estimate 12.7%.

The Japanese Yen slipped by 0.66% to ¥109.03 against the U.S Dollar. In the week prior, the Yen had fallen by 1.69% to ¥108.37.

Out of China

It was a quieter week on the data front, with inflation figures for February in focus.

The stats were skewed to the positive, with deflationary pressures softening.

In February, the consumer prices fell by 0.2%, year-on-year, after having fallen by 0.3% in January.

Wholesale inflationary pressures picked up, however, accelerating from 0.3% to 1.7%.

From the previous Sunday, trade data set the tone going into the week, with exports surging by 60.6% in February. Imports jumped by 22.2% pointing to sustained demand to support riskier assets.

In the week ending 5th March, the Chinese Yuan fell by 0.18% to CNY6.5084. In the week prior, the Yuan had fallen by 0.36% to CNY6.4970.

The CSI300 fell by 2.21%, with the Hang Seng ending the week down by 1.23%.

World Stocks Hit Highest in a Week as Inflation Scare Fades

By Ritvik Carvalho

European stocks climbed, with the pan-European STOXX 600 index reaching a one-year peak and up 0.2% on the day. France’s CAC 40 index rose 0.14%, and Italy’s FTSEMIB 0.8%%. Britain’s FTSE 100 index fell 0.36% and Germany’s DAX traded flat. [.EU]

MSCI’s All Country World Index, which tracks stocks across 49 countries, rose to its highest in just over a week, up 0.7% on the day.

Earlier in Asia, an index of regional stocks excluding Japan rose 1.78%, led by a 2.3% surge in South Korea’s Kospi, and was on track for its first three-day advance in three weeks.

China’s Shanghai Composite rallied 1.9%, helped by local lending data. Japan’s Nikkei 225 gained 0.5%.

E-mini futures for the U.S. S&P 500 index gained to their highest in two weeks, up 0.7%.

Relative calm in the Treasuries market also helped risk sentiment, with the benchmark yield settling as low as 1.4750% after shooting to a one-year high above 1.6% last week as investors worried the U.S. economic recovery would run too hot.

“If we look at history, we see that when yields have gone up, after a while equity markets have generally been okay,” said Justin Onuekwusi, portfolio manager at Legal & General Investment Management. “The only time you really see both equities and bonds sell off is in periods when there is a significant inflation scare.”

At this point ,with unemployment still so high, it is hard to see inflation becoming a problem, Onuekwusi said. Higher yields could be read as showing “that we are actually getting out of the quagmire we have been in.”

“And there is a natural yield cap — central banks will step in when rates move too quickly. They are differentiating between levels of yield and speed at which yields move.”

The European Central Bank sets its policy on Thursday and is likely to signal faster money printing to keep a lid on borrowing costs but stop short of adding firepower to its already aggressive pandemic-fighting package.

The U.S. Labor Department said its consumer price index rose 0.4% in February, in line with expectations, after a 0.3% increase in January. Core CPI, which excludes volatile food and energy components, edged up 0.1%, just shy of the 0.2% estimate.

Analysts largely expect inflation to pick up as vaccine rollouts lead to a reopening of the economy, but worries persist that additional stimulus in the form of a $1.9 trillion coronavirus relief package set to be signed by U.S. President Joe Biden could overheat the economy.

Investors will now eye an auction of 30-year debt on Thursday, seeking to cover massive shorts. A weak seven-year auction in late February helped fuel inflation concerns and sent yields higher.

“Rises in U.S. bond yields appear to have subsided a bit after the 10-year yield has reached 1.5%, even though many investors remain cautious before the Fed’s policy meeting,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

“The Fed has ratcheted up its rhetoric on bond yields lately. The reality is, the economy is in a K-shaped recovery, with the service sector still in difficult conditions and the Fed would probably not want to let real interest rates rise.”

The dollar remained weaker following the economic data. The dollar index fell to its lowest in a week, 91.547.

The euro, on the other hand, rose to its highest in a week, at $1.19685. The safe-haven yen traded flat at 108.425 per dollar. [FRX/]

Oil prices resumed their climb following two days of declines, after the Energy Information Administration reported a storage grew more than expected. [O/R]

U.S. crude futures rose 0.7% to $64.94 per barrel. Brent crude futures rose 0.8% to $68.46 per barrel.

(Reporting by Ritvik Carvalho; additional reporting by Sujata Rao in London and Kevin Buckland in Tokyo; editing by Larry King)

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The Week Ahead – Economic Data, Monetary Policy, and China in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 42 stats in focus in the week ending 12th March. In the week prior, 70 stats had been in focus.

For the Dollar:

It’s a quieter week ahead.

February inflation figures are due out on Wednesday and Friday along with consumer sentiment figures on Friday.

JOLT’s job openings and weekly jobless claims figures will also draw attention on Thursday, however.

With market sensitivity to inflation heightened in recent weeks, expect plenty of influence from the numbers.

The Dollar Spot Index ended the week up by 1.22% to 91.985.

For the EUR:

It’s a busier week ahead on the economic data front.

German industrial production figures are due out on Monday ahead of finalized 4th quarter GDP numbers for the Eurozone on Tuesday.

Barring another revision, the GDP figures, expect Germany’s industrial production figures to have the greater impact.

On Tuesday, German trade data will also draw attention, with the markets focused on demand.

In the 2nd half of the week, industrial production figures for the Eurozone are due out.

Finalized inflation figures for Germany and Spain are also due out but will likely have a limited impact.

On the monetary policy front, the ECB monetary policy decision and press conference on Thursday will be the main event.

With market jitters over a possible shift in policy stemming from reinflation, expect the press conference to be key. Lagarde will need to assure the markets that there will be no shift in policy.

The EUR ended the week down by 1.33% to $1.1915.

For the Pound:

It’s another relatively quiet week ahead on the economic calendar.

In the first half of the week, retail sales figures for February are due out on Tuesday. With little else for the markets to consider, the BRC numbers will influence.

The markets will then need to wait for GDP, manufacturing and industrial production figures on Friday for more direction.

Trade data is also due out but will likely have a muted impact on the Pound.

The Pound ended the week down by 0.66% to $1.3841.

For the Loonie:

It’s a quieter week ahead on the economic calendar.

February employment figures and January wholesale sales figures are due out on Friday.

Employment change figures for February will be the key driver on the day.

On the monetary policy front, the Bank of Canada is also in action on Wednesday.

With the markets expecting the BoC to stand pat, the BoC press conference will be the main area of focus. Once more, inflation will likely be a hot topic…

The Loonie ended the week down by 0.62% to C$1.2659 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week.

Business and consumer confidence figures for February and March are due out on Tuesday and Wednesday.

While business investment is also key to an economic recovery, expect consumer sentiment figures to have the greatest impact.

The Aussie Dollar ended the week down by 0.26% to $0.7686.

For the Kiwi Dollar:

It’s another quiet week ahead.

Electronic card retail sales figures are due out on Wednesday ahead of Business PMI numbers on Friday.

With little else for the markets to consider, both data sets will influence.

The Kiwi Dollar ended the week down by 0.91% to $0.7167.

For the Japanese Yen:

It is another quiet week ahead.

2nd estimate GDP numbers for the 4th quarter are due out on Tuesday.

Barring a marked revision from 1st estimates, however, the stats should have a limited impact on market risk sentiment.

At the end of the week, BSI Large Manufacturing Conditions Index numbers for the 1st quarter will draw interest.

The markets will be looking for manufacturing conditions to have improved for the 1st quarter…

The Japanese Yen ended the week down by 1.63% to ¥108.31 against the U.S Dollar.

Out of China

It’s a busier week ahead. Over the weekend, trade data for February is due out and will set the tone.

Expect plenty of interest in the numbers following some disappointing private sector PMIs.

Weak figures and we could see concerns over the Chinese economic recovery begin to hit the markets.

On Wednesday, inflation figures for February will also draw attention.

With the National People’s Congress continuing from last Friday, chatter from the Chinese government will also influence market risk sentiment.

The Chinese Yuan ended the week down by 0.36% to CNY6.4970 against the U.S Dollar.

Geo-Politics

U.S Politics

Iran and the Middle East will remain a key area of focus, particularly following last week’s report on the Khashoggi murder.

For Joe Biden and the Democrats, this could prove to be the first test. A breakdown in U.S – Saudi relations would raise questions over stability in the region.

While the Iran nuclear agreement will be a main area of focus, U.S – China relations also remains a key focal point for the markets.