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

On the Macro

It’s a busy week ahead on the economic calendar, with 57 stats due out through the week ending 22-April. In the week prior, 59 stats were in focus.

For the Dollar:

The markets will need to wait until Thursday for the key stats.

Jobless claims and Philly FED Manufacturing numbers will draw interest on Thursday ahead of private sector PMIs on Friday.

Expect the jobless claims and services PMI to have the most influence on the markets.

On Thursday, Fed Chair Powell is due to speak. Expect any chatter on the economy and monetary policy to provide direction.

In the week ending April-15, the Dollar Spot Index rose by 0.71% to 100.500.

For the EUR:

Eurozone industrial production and trade data, together with German wholesale inflation, will be in focus on Wednesday.

On Thursday, finalized Eurozone inflation and flash consumer confidence figures will also draw interest.

At the end of the week, prelim April private sector PMIs for France, Germany, and the Eurozone will be the key stats. While the headline numbers will influence, expect inflation, new orders, and supply chain updates to draw plenty of attention.

At the end of the week, ECB President Lagarde is due to speak.

For the week, the EUR fell by 0.62% to $1.0810.

For the Pound:

Retail sales and private sector PMIs, due out on Friday, will be the key stats of the week.

Expect the retail sales and services sector PMI to have the most influence.

On Friday, BoE Gov. Bailey is due to speak, with any monetary policy chatter to influence the Pound.

The Pound rose by 0.27% to end the week at $1.3060.

For the Loonie:

On Wednesday, inflation figures will draw plenty of interest, with a further pickup in inflationary pressures supporting another BoC rate hike.

On Friday, retail sales will also influence.

The Loonie ended the week down 0.30% to C$1.2610 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

There are no material stats due from Australia for the markets to consider.

While there are no stats, the RBA meeting minutes will influence. The minutes are due on Tuesday.

The Aussie Dollar declined by 0.84% to $0.7395.

For the Kiwi Dollar:

It’s also a quiet week, with economic data limited to Q1 inflation figures due on Thursday.

Expect interest in the numbers, with little else for the markets to consider.

From China, Q1 GDP numbers will also influence on Monday.

The Kiwi Dollar ended the week down 1.24% to $0.6764.

For the Japanese Yen:

Industrial production will draw attention on Tuesday ahead of trade data on Wednesday.

While the numbers will draw interest, we don’t expect the figures to influence the Yen.

On Friday, inflation and private sector PMIs will also draw interest.

The Japanese Yen slumped by 1.71% to end the week at ¥126.46 against the U.S Dollar.

Out of China

Q1 GDP numbers are due out on Monday, along with industrial production and fixed asset investments.

Expect the GDP numbers to be the key stat of the week.

On Wednesday, the PBoC is also in action, with the markets expecting the PBoC to leave loan prime rates unchanged.

In the week ending April 15, the Yuan slipped by 0.10% to end the week at 6.3715 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead.

European Equities: A Week in Review – 15/04/22

The Majors

It was a mixed week for the European majors in the week ending April-15, 2022.

The CAC40 rose by 0.63%, while the DAX and the EuroStoxx600 saw losses of 0.84% and 0.25%, respectively.

A marked shift in central bank monetary policy and forward guidance, coupled with intensifying supply chain disruption weighed on riskier assets.

With U.S inflation hitting a 4 decade high and the war in Ukraine showing no signs of ending, fears of a continued rise in commodities, factory gate prices, and consumer prices were market negative.

An extended war in Ukraine would force central banks to take more aggressive measures to curb inflation, which could adversely affect the global economy.

The Stats

It was a quieter week, with the markets focused on economic sentiment and ECB monetary policy.

Economic sentiment figures for Germany and the Eurozone weakened further. In April, Germany’s ZEW Economic Sentiment Index slipped from -39.3 to -41.0, with the Eurozone’s falling from -38.7 to -43.0.

While inflation expectations softened, limiting the damage, fears of stagflation and the war in Ukraine weighed on sentiment.

Other stats in the week included finalized inflation figures for member states that had a muted impact on the EUR and European bourses.

On the monetary policy front, the ECB left the deposit and cash rates unchanged on Thursday. For the European majors, the more cautious stance was market positive.

Unlike other central banks, the ECB left interest rates unchanged and talked of downside risks to the economy stemming from the war in Ukraine.

From the U.S

At the start of the week, inflation was back in focus, with the U.S annual rate of inflation accelerating from 7.9% to 8.5%. In March, the core annual rate of inflation picked up from 6.4% to 6.5%.

On Thursday, the market focus shifted to retail sales, jobless claims, and consumer sentiment.

In March, retail sales increased by 0.5%, with core retail sales rising by 1.10%. Economists had forecast increases of 0.6% and 1.0%, respectively.

Jobless claims held below the 200k level. In the week ending April-08, jobless claims increased from 167k to 185k.

While of less influence, consumer sentiment also drew interest amidst the shift in FED policy forced by the surge in consumer prices.

In April, the Michigan Consumer Sentiment Index jumped from 59.4 to 65.7.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen and Continental slid by 2.65% and 1.61%, respectively, with BMW falling by 0.99%. Daimler ended the week with a modest 0.16% gain.

It was a mixed week for the banking sector. Deutsche Bank tumbled by 7.33%, with Commerzbank falling by 6.91%.

From the CAC, it was a bullish week for the banks. Soc Gen rallied by 4.57%, with Credit Agricole and BNP Paribas rising by 0.91% and 3.47%, respectively.

Things were also bullish for the French auto sector. Stellantis NV and Renault ended the week up 1.28% and 1.74%, respectively.

Air France-KLM and Airbus saw gains of 3.63% and 2.63%, respectively.

On the VIX Index

It was a second consecutive week in the green for the VIX in the week ending April-15.

Following a 7.79% gain from the previous week, the VIX rose by 7.28% to end the week at 22.70.

2-days in the green from 4 sessions, which included a 15.2% jump on Monday, delivered the upside.

In the week, the Dow fell by 0.78%, with the NASDAQ and the S&P500 sliding by 2.63% and 2.13%, respectively.

VIX 150422 Weekly Chart

The Week Ahead

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

Mid-week, Eurozone trade, and industrial production figures will draw interest ahead of finalized inflation figures on Thursday.

On Friday, prelim private sector PMIs for France, Germany, and the Eurozone will be the key stats of the week.

From the U.S, jobless claims and private sector PMIs will also influence.

Economic data from China will set the tone on Monday, with GDP and industrial production figures in focus.

While the stats will provide direction, news updates on the war in Ukraine will remain the key driver along with central bank chatter.

The Weekly Wrap – Another Spike in Inflation Delivered a Dollar Boost

The Stats

It was a busy week on the economic calendar for the week ending April-15, 2022.

A total of 59 stats were monitored, following 33 stats in the week prior.

Of the 59 stats, 27 beat forecasts, with 23 economic indicators coming up short of forecasts. 9 stats were in line with forecasts.

Looking at the numbers, 29 of the stats reflected an upward trend. Of the remaining 30 stats, 28 stats were weaker.

Out of the U.S

At the start of the week, inflation was back in focus, with the U.S annual rate of inflation accelerating from 7.9% to 8.5%. In March, the core annual rate of inflation picked up from 6.4% to 6.5%.

On Thursday, the market focus shifted to retail sales, jobless claims, and consumer sentiment.

In March, retail sales increased by 0.5%, with core retail sales rising by 1.10%. Economists had forecast increases of 0.6% and 1.0%, respectively.

Jobless claims held below the 200k level. In the week ending April-08, jobless claims increased from 167k to 185k.

While of less influence, consumer sentiment also drew interest amidst the shift in FED policy forced by the surge in consumer prices.

In April, the Michigan Consumer Sentiment Index jumped from 59.4 to 65.7.

In the week ending April 15, 2022, the Dollar Spot Index rose by 0.71% to end the week at 100.50. The Index jumped by 1.18% to 99.796 in the week prior.

Out of the UK

GDP and production, inflation, and employment figures were the key stats of the week.

It was a mixed set of numbers for the Pound, with the UK economy growing slower than forecast.

In February, the UK economy grew by 0.1%, slowing from 0.8% growth in March. Year on year, the economy also expanded at a slower pace, easing from 10.5% to 9.5%.

Manufacturing and industrial production figures were disappointing, while the UK’s unemployment rate slipped from 3.9% to 3.8% in February. Claimant counts for March were also positive, falling by 46.9k. In February, claimant counts declined by 58.0k.

On Wednesday, inflation figures added further pressure on the BoE to take a more aggressive stance on monetary policy.

In March, the UK’s annual rate of inflation accelerated from 6.2% to 7.0%.

In the week, the Pound rose by 0.27% to end the week at $1.3060. The Pound fell by 0.68% to $1.3025 in the week prior.

The FTSE100 ended the week down 0.68%, following a 1.73% gain from the previous week.

Out of the Eurozone

It was a quieter week, with the markets focused on economic sentiment and ECB monetary policy.

Economic sentiment figures for Germany and the Eurozone weakened further. In April, Germany’s ZEW Economic Sentiment Index slipped from -39.3 to -41.0, with the Eurozone’s falling from -38.7 to -43.0.

While inflation expectations softened, limiting the damage, fears of stagflation and the war in Ukraine weighed on sentiment.

Other stats in the week included finalized inflation figures for member states that had a muted impact on the EUR and European bourses.

On the monetary policy front, the ECB left the deposit and cash rates unchanged on Thursday. The EUR took a hit in response to the ECB falling short of market policy expectations. For the European majors, the more cautious stance was market positive.

Unlike other central banks, the ECB left interest rates unchanged and talked of downside risks to the economy stemming from the war in Ukraine.

For the week, the EUR fell by 0.62% to $1.0810. In the previous week, the EUR slid by 1.50% to $1.0877.

In the week, the CAC40 rose by 0.63%, while the DAX and the EuroStoxx600 saw losses of 0.84% and 0.25%, respectively.

For the Loonie

It was a particularly quiet week, with stats limited to manufacturing and wholesale sales figures.

The stats had a muted impact on the Loonie, with the Bank of Canada monetary policy decision the main event.

In line with market expectations, the BoC lifted interest rates by 50 basis points to 1.00%, with more rate hikes to come in a bid to curb inflation.

In the week ending April-15, the Loonie fell by 0.30 to C$1.2610 against the Greenback. The Loonie fell by 0.40% to C$1.2572 in the week prior.

Elsewhere

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

The Aussie Dollar fell by 0.84% to $0.7395, with the Kiwi Dollar sliding 1.24% to end the week at $0.6764.

For the Aussie Dollar

Business and consumer confidence and employment were the key areas of focus in the week.

The stats were mixed. While business confidence improved, consumer sentiment waned once more. The Westpac Consumer Sentiment Index fell by 0.9% after a 4.2% slide in March.

Of greater significance was weaker than expected employment data. In March, employment increased by 17.9k, falling short of forecasts, and a 77.4k jump in February. As a result, the unemployment rate held steady at 4.0% versus a forecasted fall to 3.9%.

For the Kiwi Dollar

Key stats in the week included electronic card retail sales, business confidence, and Business PMI numbers.

The stats were also mixed. Electronic card retail sales fell again, with business confidence also deteriorating. In March, the Business PMI rose from 53.6 to 53.8, the only positive stat of the week.

While the stats drew interest, the RBNZ monetary policy decision was the main event.

On Wednesday, the RBNZ lifted rates by 50 basis points to 1.5% to offer greater flexibility to tackle economic uncertainty. Economists had forecast a 25-basis point hike. The RBNZ raised rates to curb inflation.

For the Japanese Yen

There were no stats to provide the Japanese Yen with direction. The lack of stats left the Yen on the defensive against the Dollar, with monetary policy divergence favoring the Greenback.

The Japanese Yen slid by 1.71% to end the week at ¥126.46 against the Dollar. In the week prior, the Yen ended the week down by 1.49% to ¥124.34.

Out of China

In a relatively quiet week, the market focused on inflation and trade data from China.

The stats were mixed. A 14.7% rise in exports, year-on-year, was market positive, while a pickup in inflationary pressure weighed on riskier assets.

In March, China’s annual rate of inflation accelerated from 0.9% to 1.5% as supply chain disruption intensified.

In the week ending April-15, the Chinese Yuan fell by 0.10% to CNY6.3715. The Yuan fell by 0.03% to CNY6.3650 in the week prior.

The Hang Seng Index ended the week down 1.62%, with the CSI300 falling by 0.99%.

The Week Ahead – Economic Data, the BoC and the ECB and Russia in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 61 stats due out through the week ending 15-April. In the week prior, 33 stats were in focus.

For the Dollar:

The week kicks off with inflation figures 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. Such a combination is unlikely to deter the FED, however.

In the week ending April-08, the Dollar Spot Index rose by 1.18% to 99.796.

For the EUR:

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 support the EUR.

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

For the week, the EUR slid by 1.50% to $1.0877.

For the Pound:

Industrial and manufacturing production, trade, and GDP numbers are out on Monday. Expect the production and GDP numbers to garner the most interest.

On Tuesday, the focus shifts to claimant count and unemployment figures ahead of inflation numbers on Wednesday.

Expect plenty of sensitivity to this week’s stats as the markets pencil in monthly rate hikes through to November.

The Pound fell by 0.68% to end the week at $1.3025.

For the Loonie:

It is a quiet week. Economic data includes wholesale sales and manufacturing sales figures. We don’t expect the numbers to influence, however, with the BoC monetary policy decision on Wednesday the main event.

The Loonie ended the week down 0.40% to C$1.2572 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

It’s a busier week ahead. Early in the week, business and consumer confidence figures will draw interest.

On Thursday, employment numbers for March will be the key, however. A sharp increase in hiring would support an RBA move on cash rates.

The Aussie Dollar slipped by 0.51% to $0.7458.

For the Kiwi Dollar:

Early in the week, the focus will be on electronic card retail sales and business confidence. While both sets of numbers will draw interest, electronic card retail sales will likely more influence on the Kiwi.

On Thursday, Business PMI numbers are also due out but will likely have a muted impact on the Kiwi Dollar.

The main event of the week will be the RNNZ monetary policy decision.

The Kiwi Dollar ended the week down 1.13% to $0.6849.

For the Japanese Yen:

It’s a quiet week ahead. There are no material stats to provide the Japanese with direction. The lack of stats will leave the Japanese Yen in the hands of market risk sentiment and monetary policy divergence.

The Japanese Yen slumped by 1.49% to end the week at ¥124.34 against the U.S Dollar.

Out of China

It’s a busier week ahead, with inflation and trade data due out. Both sets of numbers will draw plenty of interest.

While the stats will provide riskier assets with direction, updates from China on COVID-19 and lockdown measures will also need monitoring.

In the week ending April 08, the Yuan slipped by 0.03% to end the week at 6.3650 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 – 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.

Economic Data from the Eurozone Delivers Mixed Fortunes for the EUR

Eurozone economic data was on the lighter side this morning. Stats were limited to German industrial production and Eurozone retail sales figures.

With the EUR under pressure following the more hawkish than expected FOMC meeting minutes, today’s stats delivered mixed results for the EUR.

German Industrial Production

In February, German industrial production increased by 0.2% versus a forecasted 0.2% decline. Production had risen by 1.4% in the previous month.

According to Destatis,

  • Production in industry excluding energy and construction rose by 0.1%.
  • Within industry, consumer goods production jumped by 4.4%, with intermediate goods production up 0.5%.
  • Capital goods production fell by 2.0%.
  • Outside industry, energy production increased by 4.9%, while production in construction fell by 0.7%.
  • Compared with February 2021, industrial production was up 3.2, while down 3.8% compared with February 2020.

Eurozone Retail Sales

In February, retail sales across the euro area increased by 0.3%, falling short of a forecasted 0.6% rise. Retail sales rose by 0.2% in the month prior.

According to Eurostat,

  • Automotive fuel sales jumped by 3.2%, with non-food product sales up 0.8%.
  • Food, drinks, and tobacco sales fell by 0.5%.
  • Slovenia (+8.0%), the Netherlands (+4.0%), and Portugal (+2.3%) had the most marked increases in sales.
  • By contrast, Belgium (-1.8%) and Estonia (-1.7%) had the largest falls in retail sales.
  • Compared with February 2021, retail sales increased by 5.0%, driven by a 12.0% surge in automotive fuel sales and a 9.3% increase in non-food product sales.

Market Impact

Today’s stats delivered mixed results for the EUR. In response to the German industrial production figures, the EUR struck a current-day high of $1.09341 before hitting reverse. Eurozone retail sales figures were disappointing, with the EUR falling to a post-stat and current-day low of $1.08647 before finding support.

At the time of writing, the EUR was down by 0.17% to $1.08771.

070422 EURUSD Hourly Chart

Next Up

The ECB monetary policy meeting minutes will draw plenty of attention later today, with the markets looking for guidance on how the ECB will curb inflation.

On the economic data front, U.S jobless claims will also influence.

Pound Finds Early Support, while Mining Stocks Weigh on the FTSE100

It was a relatively quiet morning on the UK economic calendar. The UK’s finalized service and composite PMIs for March were in focus.

In March, the services PMI increased from 60.5 to 62.6, up from a prelim 61.0. Despite the manufacturing PMI falling to a 13-month low of 55.2, the composite PMI rose from 59.9 to 60.9 (prelim 59.7).

According to the March survey,

  • Removal of pandemic restrictions and the return to offices supported the services sector, which grew at the second-fastest pace since May-1997.
  • Business sentiment towards the year ahead weakened due to Russia’s invasion of Ukraine.
  • The rate of prices charged inflation was the steepest since the index began in July 1996.
  • Staffing levels increased at the fastest pace since October 2021, with staff shortages leading to weaker supplier performance.
  • Output prices, driven by higher salaries and prices for energy, fuel, and raw materials, rose at the second-fastest pace since records began.

Market Impact

Ahead of today’s stats, the Pound fell to a pre-stat and current-day low of $1.31060 before rising to a pre-stat and current-day high of $1.31447.

In response to today’s PMIs, the Pound rose to a post-stat high of $1.31922 before falling to a post-stat low of $1.31155.

At the time of writing, the Pound was up by 0.08% to $1.31231.

While the PMI numbers were Pound positive, it has been a bearish start for the FTSE100.

At the time of writing, the FTSE100 was down by 0.13% to 7,549.10.

Mining stocks weighed this morning, with Rio Tinto (-1.72%), Anglo American (-1.82%), and Glencore (-1.20%) hitting reverse.

Mining stocks struggled early on as the markets awaited news of fresh EU sanctions on Russia.

Service Sector and Composite PMIs Deliver EUR Support

It was a busy Eurozone economic calendar this morning. Member state and Eurozone service sector and composite PMIs were in focus.

Member States

For Spain, the services PMI fell from 56.6 to 53.4 versus a forecasted 55.2.

In Italy, service sector activity saw slower growth, with the PMI declining from 52.8 to 52.1. Economists had forecast a fall to 51.5.

For France, the services PMI rose from 55.5 to 57.4, which was in line with prelim figures.

Germany’s services PMI increased from 55.8 to 56.1, up from a prelim 55.0.

The Eurozone

For the Eurozone, the services PMI rose from 55.5 to 55.6, up from a prelim of 54.8.

As a result, the Composite PMI slipped from 55.5 to a two-month low of 54.9, up from a prelim 54.5.

According to the March survey,

  • At the composite level, service sector activity drove growth in March, with output up marginally from February.
  • The upturn was supported by a loosening of COVID-19 containment measures, leading to higher activity levels to support increased demand for goods and services.
  • New export orders fell for the first time since Nov-2020, with the Russian invasion of Ukraine hitting the manufacturing sector in particular.
  • Inflationary pressures and supply-chain issues resurfaced, adding to the private sector woes.
  • As a result, business confidence weakened across the services and manufacturing sectors.
  • Output expectations tumbled to their weakest in 17-months.

By Country

  • Ireland ranked first, with the composite PMI hitting a 5-month high of 61.0.
  • France came in second, with an 8-month high of 56.3, followed by German, Spain, and Italy, each seeing their composites at 2-month lows.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low of $1.09623 before rising to a pre-stat high of $1.09839.

The EUR found support over the release of today’s PMIs, hitting a day high of $1.09887 before easing back.

At the time of writing, the EUR was up by 0.10% to $1.09833.

050422 EURUSD Hourly Chart

Next Up

ISM Non-Manufacturing PMI figures from the U.S. While the numbers will influence, the markets are also awaiting news of fresh EU sanctions on Russia, which will draw plenty of attention.

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.

Manufacturing PMI Weighs on the Pound, While the FTSE100 Finds Relief

It was a relatively quiet morning on the UK economic calendar. The UK’s finalized manufacturing PMI for March was in focus.

In March, the UK Manufacturing PMI fell from 58.0 to a 13-month low of 55.2, which was down from a prelim 55.5.

According to the March survey,

  • New orders increased at the weakest pace in the current 14-month run of increases.
  • Export orders contracted for the sixth time in seven months, with domestic orders also softer.
  • Firms attributed weaker new orders to rising geopolitical tensions, ongoing difficulties following Brexit, and loss of sales due to supply chain constraints.
  • Input prices increased for a twenty-eighth consecutive month, with the rate of increase hitting a three-month high.
  • Average selling prices also increased at the fastest pace in three months.
  • Despite softer demand, employment expanded for the fifteenth consecutive month.
  • Concerns over rising geopolitical tensions, inflationary pressures, and labor shortages left positive sentiment at a 14-month low.

Market Impact

Ahead of today’s stats, the Pound rose to a pre-stat and current-day high of $1.31513 before falling to a pre-stat and current-day low of $1.31124.

In response to today’s PMI, the Pound fell to a post-stat low of $1.31181 before rising to a post-stat high of $1.31307.

At the time of writing, the Pound was down by 0.04% to $1.31289. Despite today’s PMI, market sentiment towards BoE monetary policy remained Pound positive.

Cable 010422 Hourly Chart

While the PMI tested Pound support, it has been a bullish start for the FTSE100, with a pullback in crude oil prices providing riskier assets with early support.

At the time of writing, the FTSE100 was up by 0.38% to 7,544.41, while Brent Crude was down by 0.78%.

Mining stocks were on the move this morning, with Rio Tinto (+1.73%), Anglo American (+1.92%), and Glencore (+1.19%) making solid gains.

March Manufacturing Sector PMIs Test EUR Support

It was a busy start to the European session this morning, with manufacturing sector PMIs for Spain and Italy in focus. Finalized PMIs for France, Germany, and the Eurozone also drew attention.

Member State Manufacturing Sector PMIs

In March, Spain’s manufacturing PMI fell from 56.9 to 54.2, with Italy’s PMI down 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, which was down from a prelim of 54.8. Germany’s PMI declined from 58.4 to 56.9, which was down from a prelim 57.6.

Eurozone’s Manufacturing PMI Hits a 14-month Low

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

According to the March survey,

  • Geopolitical tension was mentioned as an influencer on demand, while also weighing on business confidence.
  • Supply chain pressures intensified as a result of rising COVID-19 cases in China and Russia’s invasion of Ukraine.
  • Surging commodity, fuel, and energy costs led to input price inflation hitting a 4-month high.
  • To ease margin pressures, manufacturers raised their charges to the greatest extent on record.
  • By nation, Ireland ranked first, with a 2-month high of 59.4, closely followed by Austria (59.3).
  • The Netherlands ranked third, with a 15-month low of 58.4 followed by Germany which fell to an 18-month low of 56.9.
  • Spain sat at the bottom of the table, with a 13-month low of 54.2

Market Impact

Ahead of today’s stats, the EUR struck a pre-stat and current-day high of $1.10762 before sliding to a pre-stat low of $1.10524.

In response to today’s figures, the EUR fell to a post-stat and current-day low of $1.10430 before rising to a post-stat high of $1.10742.

At the time of writing, the EUR was up by 0.06% to $1.0733, with focus shifting to finalized Eurozone inflation figures for March.

010422 EURUSD Hourly Chart

Next Up

Finalized Eurozone inflation figures for March are due out shortly. U.S nonfarm payrolls, due out later in the day, will be the key stat of the day, however.

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%.

German Business Sentiment Sinks as Uncertainty Weighs

Following better-than-expected private sector PMIs and an ECB Economic Bulletin highlighting downside risks to the economy, the focus shifted to German business sentiment this morning.

Germany’s IFO Business Climate Index Sinks

In March, Germany’s Business Expectations Index slid by a record 13.3 points to 85.1. The Current Assessment Index fell more modestly, from 98.6 to 97.0.

As a result, the IFO Business Climate Index fell from 98.5 to 90.8.

According to the March survey,

  • In manufacturing, the index fell at the fastest pace on record. Expectations also saw a record decline, with companies rating their business outlook as extremely uncertain.
  • In services, business climate also deteriorated markedly. Expectations weakened, with the outlook for the logistics industry particularly bleak.
  • In trade, the business climate index collapsed, with the expectations indicator seeing a record fall.

Market Impact

Ahead of today’s stats, the EUR fell to a pre-stat and current-day low of $1.09951 before rising to a pre-stat and current-day high of $1.10379.

Following today’s figures, the EUR rose to a post-stat high of $1.10201 before falling to a post-stat low of $1.10009.

At the time of writing, the EUR was up by 0.09% to $1.10076.

250322 EURUSD Hourly Chart

Next Up

Consumer expectation and sentiment figures from the U.S.

March Prelim Private Sector PMIs Deliver Little EUR Comfort

It was a busy start to the European session this morning, with prelim private sector PMIs for France, Germany, and the Eurozone in focus.

From the ECB, the Economic Bulletin also drew plenty of attention, with the markets eyeing the ECB’s impact analysis of Russia’s invasion of Ukraine.

Member State Private Sector PMIs

According to prelim figures, the French manufacturing PMI fell from 57.2 to 54.8, while the services PMI rose from 55.5 to 57.4. Economists had forecast both PMIs to come in at 55.0.

Germany’s manufacturing PMI slipped from 58.4 to 57.6 versus a forecasted 55.8. The services PMI declined from 55.8 to 55.0 versus a forecasted 53.8.

Eurozone PMIs Reflect Modest Decline in Private Sector Activity

For the Eurozone, the manufacturing PMI fell from 58.2 to a 14-month low of 57.0, with the services PMI declining from 55.5 to a 2-month low of 54.8. Economists forecast PMIs of 56.0 and 54.2, respectively.

As a result, the Composite PMI slipped from 55.5 to a 2-month low of 54.5 versus a forecasted 53.9.

According to the prelim March survey,

  • Despite the decline, the rate of expansion remained above the survey’s pre-pandemic long-run average.
  • Renewed supply chain issues, uncertainty, higher costs, and weaker demand stemming from Russia’s invasion of Ukraine weighed on the manufacturing sector.
  • Manufacturers reported a sharp fall in new orders, which fell to the lowest level since last October.
  • New export orders for goods fell for the first time in 21-months.
  • Average input prices across the private sector rose at the fastest pace on record.
  • Business sentiment fell to its lowest level since October-2020.

ECB Economic Bulletin Focuses on Russia’s Invasion of Ukraine

The ECB Economic Bulletin painted a bleak picture. Sentiment was aligned with last week’s ZEW Economic Sentiment figures for Germany and the Eurozone.

In March, Germany’s ZEW Economic Sentiment Index tumbled from 54.3 to -39.3, with the Eurozone’s sliding from 48.6 to -38.7.

Salient points from the Economic Bulletin included:

  • The Russian invasion will materially impact economic activity and inflation.
  • Higher energy and commodity prices, disruption of international commerce, and weaker confidence will hit economic growth prospects.
  • The degree of impact will depend on the impact of current and future sanctions and on how the conflict evolves.
  • If the medium-term inflation outlook does not soften, the ECB will end net purchases under the APP in the third quarter.
  • Net purchases under the APP will be €40bn in April, €30bn in May, and €20bn in June.
  • Any adjustments to the key ECB interest rates will take place after the conclusion of the net purchases under the APP.
  • Risks to the economic outlook have increased substantially and tilted to the downside.

Market Impact

Ahead of today’s stats and bulletin, the EUR struck a pre-stat and current-day high of $1.10138 before sliding to a pre-stat low of $1.09724.

Following today’s figures, the EUR fell to a post-stat and current-day low of $1.09723 before finding support.

At the time of writing, the EUR was down by 0.22% to $1.09802.

240322 EURUSD Hourly Chart

Next Up

Prelim March private sector PMIs from the U.S. will be due out shortly.

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.