The Weekly Wrap – The Dollar Falls Further Back in Busier Week on the Data Front

The Stats

It was a relatively busy week on the economic calendar, in the week ending 19th February.

A total of 72 stats were monitored, following 33 stats from the week prior.

Of the 72 stats, 48 came in ahead forecasts, with 22 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 41 of the stats reflected an upward trend from previous figures. Of the remaining 31 stats, 30 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive weekly loss, marking just the 3rd weekly loss in 7-weeks. The Dollar Spot Index fell by 0.13% to 90.364. In the previous week, the Dollar had fallen 0.62% to 90.480.

Out of the U.S

It was a busier week on the economic data front.

In the 1st half of the week, NY Empire State Manufacturing, retail sales, and industrial production figures were in focus.

The stats were skewed to the positive, with core retail sales jumping by 5.9% in January. In December, core retail sales had fallen by 1.8%.

Retail sales figures were also impressive, rising by 5.3% to reverse a 1% fall from December.

Industrial production rose by 0.9% in January, following a 1.3% increase in December.

Also positive was a pickup in manufacturing sector activity in New York State. In February, the NY Empire State Manufacturing Index increased from 3.5 to 12.1.

Through the 2nd half of the week, the stats were more mixed.

Weekly jobless claims figures disappointed on Thursday. In the week ending 12th February, initial jobless claims rose from 848k to 861k. Economists had forecast a fall to 765k.

The Philly FED Manufacturing Index fell from 26.5 to 23.1 in February, also a negative for the Dollar.

Wrapping things up at the end of the week were prelim private sector PMIs for February.

In February, the all-important services PMI rose from 58.3 to 58.9, while the manufacturing PMI fell from 59.2 to 58.5.

On the monetary policy front, the FOMC meeting minutes assured the markets that policy would remain unchanged for some time.

Ahead of the minutes there had been some concern of a tapering to the bond purchasing program. The minutes suggested otherwise.

In the equity markets, the NASDAQ and S&P500 fell by 1.57% and by 0.71% respectively, while the Dow rose by 0.11%.

Out of the UK

It was a relatively busy week on the economic data front.

Mid-week, January inflation figures came in better than expected, giving the Pound a boost. The annual rate of inflation ticked up from 0.6% to 0.7%.

The uptick came in spite of consumer prices falling by 0.2%, month-on-month.

At the end of the week retail sales and private sector PMI numbers were also in focus.

Core retail sales slumped by 8.8% in January, reversing a modest 0.4% gain from December.

Retail sales slid by 8.2%, reversing a 0.3% rise from December. Both sets of numbers were far worse than forecasts, with the slide in February dragging retail sales into the deep red year-on-year.

Prelim private sector PMI figures provided support, however, following particularly disappointing January numbers.

In February, the Services PMI rose from 39.5 to 49.7, with the Manufacturing PMI increasing from 54.1 to 54.9. As a result, the composite PMI increased from 41.2 to 49.8 in February, according to prelim figures.

Extended lockdown measures that have no end in sight remained a drag on the services sector mid-way through the 1st quarter.

In the week, the Pound gained 1.21% to end the week at $1.4016. In the week prior, the Pound had risen by 0.83% to $1.3849.

The FTSE100 ended the week up by 0.52%, following a 1.55% gain from the previous week.

Out of the Eurozone

It was also relatively busy week on the economic data front.

Through the 1st half of the week, economic data for Germany and the Eurozone were in focus.

The stats were skewed to the positive, providing EUR support ahead of a Friday data dump.

For the Eurozone, the trade surplus widened from €25.8bn to €29.2bn reflecting improving trade terms.

Economic sentiment figures for February also delivered support. Germany’s ZEW Economic Sentiment index rose from 61.8 to 71.2, with the Eurozone’s rising from 58.3 to 69.8.

2nd estimate GDP figures for the Eurozone were also EUR positive, with both the quarterly and annualized seeing upward revisions.

The only blemish early on in the week was a larger than expected fall in industrial production. Production fell by 1.6%, partially reversing a 2.5% rise from November.

In the 2nd half of the week, Eurozone consumer confidence waned in February, with the index falling from -13.8 to -14.8.

Vaccine woes and extended containment measures likely contributed to the demise.

At the end of the week, private sector PMI numbers for February were in focus.

According to the prelim survey, the French Manufacturing PMI jumped from 51.6 to a 3-year high 55.0 in February. Economists had forecast a decline to 51.4.

The services PMI fell from 47.3 to a 3-month low 43.6, which was worse than a forecasted decline to 47.0.

German manufacturing sector activity also picked up in February, with the prelim Manufacturing PMI rising from 57.1 to a 36-month high 60.6. Economists had forecasted a fall to 56.5.

Service sector troubles continued, however, with the services PMI falling from 46.7 to a 9-month low 45,9. Economists had forecast a decline to 46.5.

For the Eurozone, the Manufacturing PMI increased from 54.8 to 57.7, while the services PMI fell from 45.4 to 44.7.

In spite of the fall in the services PMI, the composite PMI rose from 47.9 to 48.1, supported by the manufacturing sector.

On the monetary policy front, the ECB meeting minutes had a cautiously optimistic tone, supporting the EUR. Members did note that risks remained titled to the downside, with EUR strength a possible concern.

For the week, the EUR slipped by 0.01 % to $1.2119. In the week prior, the EUR had risen by 0.61% to $1.2120.

For the European major indexes, it was another mixed week, following the previous week’s mixed results. The CAC40 and the EuroStoxx600 rose by 1.23% and by 0.21% respectively, while the fell by 0.40%,

For the Loonie

It was a relatively quiet week. Economic data included inflation figures for January and retail sales figures for December.

In January, inflationary pressures picked up, with the annual core rate of inflation accelerating from 1.5% to 1.6%.

Month-on-month, core consumer prices rose by 0.5%, reversing a 0.4% decline from December. Consumer prices rose by 0.6% in the month.

At the end of the week, retail sales disappointed, however.

In December, core retail sales slid by 4.1%, reversing a 2.1% jump in November. Retail sales fell by 3.4%, reversing a 1.3% rise in November.

While the stats were mixed in the week, the Loonie found support on a continued rise in crude oil prices.

In the week ending 19th February, the Loonie rose by 0.64% to C$1.2615. In the week prior, the Loonie had increased by 0.47% to C$1.2696.

Elsewhere

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

In the week ending 19th February, the Aussie Dollar rallied by 1.39% to $0.7869, with the Kiwi Dollar ended the week up by 1.05% to $0.7299.

For the Aussie Dollar

It was a relatively quiet week.

Key stats included January employment and retail sales figures.

It was a mixed set of numbers for the Aussie Dollar.

While employment rose by a modest 29.1k in January, full employment jumped by 59.0k.

The pickup in full employment supported a fall in the unemployment rate from 6.6% to 6.4%. Some of this was as a result of a fall in the participation rate from 66.2% to 66.1%, however.

At the end of the week, retail sales rose by 0.6%, according to prelim figures. The rise was modest, however, following a 4.2% slide in December.

All in all, the numbers were good enough to deliver the upside for the week.

On the monetary policy front, the RBA meeting minutes were also in focus early in the week. There were no major surprises, however, following the RBA’s surprise move earlier in the month.

For the Kiwi Dollar

It was a particularly quiet week.

4th quarter wholesale inflation figures were in focus on Friday. The producer input price index ended the 4th quarter flat, pinning the Kiwi Dollar back early in the final session.

It wasn’t enough to leave the Kiwi in the red for the week, however. A 1.08% rally on Friday delivered the upside for the week.

For the Japanese Yen

It was a busy week.

In the 1st half of the week, 4th quarter GDP numbers were in focus. The Japanese economy grew by more than anticipated in the quarter.

Year-on-year, the economy expanded by 12.7%, with the economy growing by 3% in the quarter. Growth did moderate from the 3rd quarter, however, which was to be expected.

Mid-week, trade figures disappointed, with Japan’s trade balance sliding from a ¥749.6bn surplus to a ¥323.9bn deficit.

At the end of the week, it was a mixed bag on the economic data front.

Deflationary pressures eased in January, albetit modestly, with Japan’s manufacturing sector returning to expansion.

COVID-19 containment measures continued to hit the services sector, however, which contracted at a more marked pace in February.

The Japanese Yen fell by 0.49% to ¥105.45 against the U.S Dollar. In the week prior, the Yen had risen by 0.43% to ¥104.94.

Out of China

It was a particularly quiet week on the data front. There were no stats with the China markets closed until Thursday’s reopening.

In the week ending 19th February, the Chinese Yuan rose by 0.01% to CNY6.4577. In the week prior, the Yuan had risen by 0.12% to CNY6.4582.

The CSI300 fell by 0.50%, while the Hang Seng ended the week up by 1.56%.

The Week Ahead – A Busy Economic Calendar and U.S Politics in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 77 stats in focus in the week ending 19th February. In the week prior, 33 stats had been in focus.

For the Dollar:

It’s a busy week ahead.

In the 1st half of the week, January retail sales and industrial production figures will be in focus.

Expect retail sales figures to be the key driver.

The focus will then shift to Philly FED Manufacturing PMI numbers and weekly jobless claims figures on Friday.

While we would expect plenty of sensitivity to the jobless claim figures, the PMI numbers will also influence.

At the end of the week, prelim private sector PMI numbers for February wrap things up on Friday. The Services PMI will likely have the greatest impact on the day.

Other stats include wholesale inflation and housing sector data along with NY Empire State Manufacturing figures. These stats should have a muted impact on the markets, however.

On the monetary policy front, the FOMC meeting minutes are also due out on Wednesday. Expect the minutes to influence. The markets will be looking for the Committee to be aligned with Powell’s recent forward guidance.

The Dollar Spot Index ended the week down by 0.62% to 90.480.

For the EUR:

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

In the 1st half of the week, economic data for Germany and the Eurozone will be in focus.

2nd estimate GDP numbers for the 4th quarter and ZEW Economic Sentiment figures for February are due out.

Industrial production and trade data for the Eurozone will also draw attention at the start of the week.

On Thursday, finalized January inflation and consumer confidence figures for the Eurozone are due out ahead of a busy Friday.

Prelim private sector PMI numbers for France, Germany, and the Eurozone are due out on Friday.

While Germany’s Manufacturing PMI will have the greatest influence, also expect sensitivity to the rest of the PMIs. Lockdown measures are likely to hurt the services sector further in February. Any impact on the manufacturing sector and expect the EUR to come under pressure.

On the monetary policy front, the ECB monetary policy meeting minutes are due out on Thursday. We can expect plenty of interest. In the last press conference, ECB President stood by the ECB growth forecasts. Lagarde did warn of downside risks, however.

The EUR ended the week up by 0.61% to $1.2120.

For the Pound:

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

On Wednesday, January inflation figures are due out ahead of a busy Friday.

At the end of the week, January retail sales and February prelim private sector PMIs will be in focus.

Expect the retail sales and services PMI numbers to have the greatest impact on the Pound.

Other stats include CBI industrial trend orders for February. Barring particularly dire numbers, however, the stats should have a muted impact on the Pound.

The Pound ended the week up by 0.83% to $1.3849.

For the Loonie:

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

January inflation figures on Wednesday and December retail sales figures on Friday will influence.

Other stats include manufacturing sales, housing stats, and foreign security purchases. We don’t expect too much influence from the numbers, however.

From elsewhere, expect the PMI numbers from the Eurozone and the U.S to also influence. Week numbers would question the market optimism towards the economic outlook… Any shift in sentiment would weigh on crude oil prices and the Loonie.

The Loonie ended the week up by 0.47% to C$1.2696 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another relatively quiet week.

January employment figures are due out on Thursday ahead of wage growth figures on Friday.

Expect the employment numbers to have the greatest impact. Consumer spending remains key to an economic recovery. A weakening in labor market conditions would test support for the Aussie Dollar.

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

The Aussie Dollar ended the week up by 1.08% to $0.7761.

For the Kiwi Dollar:

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

Wholesale inflation figures for the 4th quarter are due out on Friday. With no other stats to consider, the Kiwi will be in the hands of market risk sentiment in the week.

Expect the Eurozone and the U.S PMI numbers on Friday to also provide direction.

The Kiwi Dollar ended the week up by 0.35% to $0.7223.

For the Japanese Yen:

It is a busy week ahead.

At the start of the week, 4th quarter GDP and finalized industrial production figures are due out.

Expect the GDP numbers to garner plenty of interest.

The focus will then shift to trade data on Wednesday ahead of inflation figures and prelim PMI numbers on Friday.

The Japanese Yen ended the week up by 0.43% to ¥104.94 against the U.S Dollar.

Out of China

It’s a quiet week ahead. With the Chinese market closed for Chinese New Year, there are no material stats to consider in the week.

The lack of stats will leave geo-politics in focus.

The Chinese Yuan ended the week up by 0.12% to CNY6.4582 against the U.S Dollar.

Geo-Politics

U.S Politics

Capitol Hill and U.S foreign policy remain key areas of focus.

The need for a COVID-19 relief package is becoming more pressing as labor market woes linger.

With the markets now expecting the Democrats to deliver Biden’s $1.9tn, economic growth forecasts are being revised upwards.

Any unexpected speed bumps on stimulus front and expect risk aversion to sweep the markets.

COVID-19

Vaccination rates and availability of vaccines will continue to be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

 

 

China’s Expansion Does not Prevent Deflation

Officials gave approval for a new game from Tencent, which helped lift the Hang Seng. Europe’s Dow Jones Stoxx 600 slipped fractionally yesterday but has recouped it and more today, led by utilities, information technology, and materials. US shares are trading with a firmer bias.

Bond markets remain quiet. Ahead of today’s US auction of $41 bln 10-year notes, the benchmark yield is near 1.16%. European yields are mostly little changed, with a slight upside bias. The dollar is mixed. The Scandis and sterling are leading the way higher. Sterling is new highs after punching through $1.38 yesterday. The dollar bloc and yen are softer. Emerging market currencies are also mostly firmer, and China’s yuan is a notable exception as trading winds down ahead of the holiday.

The JP Morgan Emerging Market Currency Index is rising for the fourth consecutive session. However, it is oil that is enjoying the longest streak. Today is the eighth session in a row that oil prices are rising, though the upside momentum may be fading. March WTI is near $58.60, after finishing last week a little below $57.00. Gold is firm within yesterday’s range, meeting resistance near $1850.

Asia Pacific

China’s economic recovery is well known, but it has not been accompanied by price pressures. Its headline CPI fell 0.3% year-over-year in January. Core inflation slipped below zero (also -0.3%) for the first time since 2010, dragged down by weak household demand for services. Part of the issue is the base effect. Headline inflation rose 1% on the month in January after a 0.7% gain in December. Food prices rose 1.6% year-over-year, down from a double-digit pace through last summer.

Pork prices, a key driver of headline inflation, fell 3.9% from a year ago, following a 1.3% decline in December. Separately, rising commodity prices lifted PPI above zero (0.3%) year-over-year for the first time since last January. The soft inflation readings are unlikely to impact PBOC policy but underscore why fears of an imminent tightening are exaggerated.

Rising commodity prices did little for Japan’s PPI. The 0.4% gain in January lifted the year-over-year rate to -1.6% from -2.0%. Meanwhile, Japan’s Summer Olympics remains up in the air. It has been riddled with numerous problems even before the pandemic. Former Prime Minister Mori’s recent comments, insulting women, has produced a new backlash, and the corporate sponsors are complaining, and nearly 400 (of 80,000) volunteers have reportedly resigned.

Pressure will mount on Mori to resign, and Prime Minister Suga has not called for his resignation either. Recent polls suggest 80% are opposed to holding the Olympic games on schedule (opening ceremony July 23). The corporate sponsors are planning on meeting ahead of the weekend to take a united stance. The theme of the Olympics ironically is “Unity in Diversity.”

The dollar is recovering from the test on JPY104.40, the lower end of our target (JPY104.40-JPY104.60). Nearby resistance is seen in the JPY104.90-JPY105.10 area. Yesterday’s loss (~0.60%) was the largest so far this year, and a higher dollar close today would be the first in four sessions. The Australian dollar extended its recent gains and poked above $0.7750 before sellers emerged. Support is seen near $0.7700, yesterday’s low, and a close below it would weaken the technical tone, hinting that the upside correction has run its course.

The PBOC set the dollar’s reference rate at CNY6.4391, a little higher than the Bloomberg survey of bank models. As the Lunar holiday is about to begin, note the dollar has been confined with a couple of minor exceptions to the range set in the first couple sessions of 2021: roughly CNY6.43 to CNY6.51. Also, the offshore yuan (CNH) has once again risen past the onshore yuan (CNY), and the gap is the widest in a month.

Europe

Sweden’s Riksbank did not surprise. There was no change in policy. It does not expect that inflation will sustainably reach its target until 2023. Officials acknowledged that the changing consumption patterns and changes to the labor market data methodology complicate the economic analysis. Sweden’s economy was among the best performers in Europe last year was a 2.8% contraction. The eurozone’s output appears to have shrunk by more than twice that.

Of the large countries in the euro area, French industrial output was the biggest negative surprise. Ironically, the Bloomberg survey’s median forecast was for a 0.4% gain, which was more than it had expected from Germany, Italy, and Spain. Instead, output fell by 0.8%, and even worse, manufacturing output collapsed by 1.7%, while economists had anticipated a 0.3% decline. Production in Germany, Italy, and Spain was expected to rise by 0.3%. Germany’s was flat, Italy’s fell by 0.2%, and Spain surprised with a 1.1% increase. The aggregate figure is due on February 15, followed by the preliminary Q4 20 GDP the next day.

The euro approached our $1.2150 target in late Asian turnover. We suspect the market may try to retest the highs, though a break of $1.2100 would suggest it has been rejected. The euro has risen for three sessions coming into today after falling in the previous four. A move above $1.2150 brings $1.2200 into view. Sterling is making new highs today, a little above $1.3850. It has held above $1.3800 so far today. Recall that a week ago, sterling had briefly traded below $1.3570. There is little chart resistance ahead of the $1.40 area.

America

The US reports January CPI today. The headline pace may tick up to 1.5% from 1.4%, while the core rate is expected to slip to 1.5% from 1.6%. It is unremarkable, but the calm is almost over. After February, the spring inflation scare will properly begin. In March 2020, headline CPI fell by 03%, in April by 0.7%, and by 0.1% in May. As these negative prints drop out, the base effect will lift the year-over-year rate. The scare will subside in June-August as the CPI in 2020 rose 0.4%-0.5% a month.

Although Mexico’s January inflation, reported yesterday, was a little firmer than expected at 3.54% (vs. the median forecast in Bloomberg’s survey of 3.45%), Mexico’s central bank is widely expected to deliver a 25 bp rate cut today will bring the overnight rate to 4.0%. The pandemic has hit Mexico particularly hard, and by some metrics, among the hardest hit in the world. The AMLO government has been reluctant to provide much fiscal support, which puts more weight on monetary policy.

Through the power of appointment, AMLO has secured a majority of the Banixco board. While today’s move is one thing, the real issue is the forward guidance about the possibility of another cut. It looks difficult without inflation falling further.

Rising oil and equities support the Canadian dollar, but it typically underperforms in a soft US dollar environment. Yesterday, it gained a little more than a third of a percent. Among the majors, only the New Zealand dollar did worse (+0.25%). The US dollar slipped through support in the CAD1.2680 area today to record its lowest level since January 23.

It snapped back above CAD1.27 in late Asia/early Europe turnover and is straddling that area. Initial resistance is seen in the CAD1.2720-CAD1.2740 area. The greenback peaked near MXN20.60 at the end of January. It settled last week a slightly below MXN20.09. Yesterday, it recorded its low so far here in February, just above MXN20.01. Resistance is seen in the MXN20.15 area. The rate decision may inject some volatility into the peso trading. It may require a break of MXN19.95 or MXN20.20 to be significant from a technical point of view.

This article was written by Marc Chandler, MarctoMarket.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – The UK Economy, Central Bank Chatter, and U.S Stimulus in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 35 stats in focus in the week ending 12th February. In the week prior, 70 stats had been in focus.

For the Dollar:

It’s a quiet week ahead.

Key stats include December’s JOLT’s job openings and January inflation figures on Tuesday and Wednesday.

Expect any pickup in inflationary pressures to support the Greenback and weigh on riskier assets.

The focus will shift to the weekly jobless claims on Thursday, ahead of consumer sentiment figures on Friday.

On the monetary policy front, FED Chair Powell is scheduled to speak late on Wednesday. Expect any chatter on the economic outlook and monetary policy to influence. At the last FOMC press conference, the FED Chair had failed to assure the markets on bond purchases.

The Dollar Spot Index ended the week up by 0.51% to 91.042.

For the EUR:

It’s also a quieter week ahead on the economic data front, with the German economy in the spotlight.

German industrial production and trade figures for December are due out on Monday and Tuesday.

Expect both data sets to influence both the EUR and the European majors.

On Friday, industrial production figures for the Eurozone will also provide direction.

Ahead of the Eurozone figures, Italian and French industrial production figures will also draw interest on Tuesday and Wednesday.

Finalized January inflation figures for Germany and Spain should have a muted impact on the markets, however.

On the monetary policy front, ECB President Lagarde is scheduled to speak late on Monday and again on Wednesday.

The EUR ended the week down by 0.74% to $1.2046.

For the Pound:

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

In the 1st half of the week, January retail sales figures will draw attention in the early hours of Tuesday. The BRC Retail Sales Monitor will likely reflect the effects of lockdown measures introduced in late December.

The focus will then shift to 4th quarter GDP figures and December industrial and manufacturing production figures due out on Friday.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak late on Wednesday. Any further talk of negative rates could peg back the Pound.

The Pound ended the week up by 0.20% to $1.3735.

For the Loonie:

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

There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of COVID-19 news and crude oil prices.

The IEA’s monthly report is due out in the week ahead. Expect the EIA and API inventory numbers to also influence.

The Loonie ended the week up by 0.16% to C$1.2756 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week.

January business confidence and February consumer sentiment figures are due out on Tuesday and Wednesday.

Business investment and consumer spending remain key to a sustainable economic recovery.

With little else for the markets to consider, expect plenty of influence from the numbers.

The Aussie Dollar ended the week up by 0.44% to $0.7678.

For the Kiwi Dollar:

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

In the 1st half of the week, inflation expectation figures will draw interest.

Through the 2nd half of the week, the focus will then shift to electronic card retail sales and Business PMI figures for January.

Retail sales figures are due out on Thursday, with PMI numbers due out on Friday. We would expect greater Kiwi Dollar sensitivity to any disappointing sales figures.

The Kiwi Dollar ended the week up by 0.07% to $0.7198.

For the Japanese Yen:

It is a particularly quiet week ahead.

There are no material stats due out of Japan, leaving the Yen in the hands of market risk sentiment.

COVID-19 and U.S politics remain key drivers near-term.

The Japanese Yen ended the week down by 0.68% to ¥105.39 against the U.S Dollar.

Out of China

It’s a quieter week ahead, with stats limited to January inflation figures due out on Wednesday.

With little else to consider in a shortened week, any rise in U.S – China tensions would also need monitoring.

The Chinese Yuan ended the week down by 0.58% to CNY6.4658 against the U.S Dollar.

Geo-Politics

U.S Politics

Stimulus talk and foreign policy moves by U.S President Joe Biden remain key in the week.

The markets will need delivery of the $1.9tn relief package to support riskier assets after some gloomy labor market numbers.

COVID-19

Vaccination rates and availability of vaccines will continue to be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S, key names include but are not limited to:

Coca-Cola (Wed), General Motors Co. (Wed), and Walt Disney Co. (Thurs).

The Weekly Wrap – Fiscal Stimulus News and a Busy Economic Calendar Drive the Markets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 5th February.

A total of 70 stats were monitored, following 57 stats from the week prior.

Of the 70 stats, 44 came in ahead forecasts, with 25 economic indicators coming up short of forecasts. There was just 1 stat that was in line with forecasts in the week.

Looking at the numbers, 40 of the stats reflected an upward trend from previous figures. Of the remaining 30 stats, 27 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive week in the green to mark a 4th weekly gain in 5-weeks. The Dollar Spot Index rose by 0.51% to $91.042. A 0.53% slide on Friday saw the Dollar give some of the gains from earlier in the week, however. In the previous week, the Dollar had fallen 0.38% to 90.584.

Out of the U.S

It was a busy week on the economic data front.

In the 1st half of the week, January private sector PMIs and ADP employment figures were in focus.

The stats were skewed to the positive, with the market’s preferred ISM Non-Manufacturing PMI rising from 57.7 to 58.7.

In January, the ISM Manufacturing PMI slipped from 60.7 to 58.7, the only blemish in the 1st half of the week.

Nonfarm payroll figures were also positive mid-week, with the ADP reporting a 174k increase in nonfarm payrolls. Nonfarm employment had fallen by 78k in December.

In the 2nd half of the week, the focus was on the U.S labor market.

In the week ending 29th January, initial jobless claims came in at 779k, down from a previous week 812k.

At the end of the week, the numbers disappointed, however.

In January, nonfarm payrolls increased by just 49k. Nonfarm payrolls had fallen by 227k in December.

Despite the low rise, the U.S unemployment rate fell from 6.7% to 6.3%. A fall in the participation rate from 61.5% to 61.4% contributed to the fall in the unemployment rate.

Economists had forecast nonfarm payrolls to rise by 50k and for the unemployment rate to hold steady at 6.7%.

Other stats in the week included 4th quarter unit labor costs and productivity figures along with trade data and factory orders. These stats had a relatively muted impact on the Dollar, however.

In the equity markets, the NASDAQ rallied by 6.01%, with the Dow and the S&P500 seeing gains of 3.89% and 4.65% respectively.

Out of the UK

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

Key stats included finalized January PMI figures and construction PMI numbers.

The stats were skewed to the positive, with finalized PMIs for both manufacturing and services seeing upward revisions.

Ultimately, a services PMI of 39.5 remained a concern, however, as lockdown measures hit.

The construction PMI also reflected the impact of the COVID-19 pandemic, with the PMI falling from 54.6 to 49.2.

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

As expected, however, the BoE left policy unchanged. The hold came amidst BoE expectations that the UK vaccination programme would fuel a rapid recovery in GDP towards pre-pandemic levels in 2021.

The topic of negative rates remained on the table, however, The BoE stated that it would take 6-months to introduce negative rates should the need for further easing arise.

In the week, the Pound gained 0.20% to end the week at $1.3735. In the week prior, the Pound had risen by 0.16% to $1.3708.

The FTSE100 ended the week up by 1.28%, partially reversing a 4.30% slide from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, private sector PMIs, GDP, and inflation figures were in focus.

The stats were also skewed to the positive, though private sector activity contracted at a quicker pace in January.

The Eurozone’s Composite PMI came in at 47.8, which was revised up from a prelim 47.5, while down from a December 49.1. In December, the Composite had risen from 45.3 to 49.1.

4th quarter GDP numbers fell by less than expected but were also disappointing, however.

In the 4th quarter, the Eurozone economy contracted by 0.7%, following the 3rd quarter’s 12.4% rebound. Economists had forecast a contraction of 1.0%.

Year-on-year, the economy contracted by 5.1%, which was better than a forecasted 5.4% contraction. In the 3rd quarter, the economy had contracted by 4.3%.

In the 2nd half of the week, Eurozone retail sales and German factory orders were mixed.

Retail sales rose by 2.0% in December, partially reversing a 5.7% slide from November.

German factory orders slid by 1.9%, partially reversing a 2.7% jump in November.

The German governments agreement to deliver more COVID-19 relief aid provided some support.

The ECB’s Economic Bulletin tested support, however, with the Bulletin highlighting downside risks.

For the week, the EUR fell by 0.74% to $1.2046, a 0.69% gain on Friday limiting the damage. In the week prior, the EUR had fallen by 0.29% to $1.2136.

For the European major indexes, it was a bullish week, bouncing back from the previous week’s sell-off. The CAC40 and the DAX30 rallied by 4.82% and by 4.64% respectively, with the contracted EuroStoxx600 gaining 3.46%.

For the Loonie

It was a relatively busy week, though the markets had to wait until Friday for any stats.

Key stats included trade and employment figures and the Ivey PMI for January.

In December, Canada’s trade deficit narrowed from C$3.56bn to C$1.67bn. That was of little comfort, however, with employment figures disappointing.

On the employment front, employment tumbled by 212.8k in January, following a 68.2k slide from December. As a result, the unemployment rate jumped from 8.6% to 9.4%.

The Ivey PMI rose from 46.7 to 48.4, in January, providing Loonie support on the day alongside rising crude oil prices.

In the week ending 5th February, the Loonie rose by 0.16% to C$1.2756. In the week prior, the Loonie had declined by 0.35% to C$1.2777.

Elsewhere

A bullish end to the week delivered gains for the Aussie Dollar and the Kiwi Dollar.

In the week ending 5th February, the Aussie Dollar rose by 0.44% to $0.7678, with the Kiwi Dollar ended the week up by 0.07% to $0.7198.

A 1.03% jump in the Aussie Dollar and a 0.59% gain in the Kiwi Dollar on Friday delivered the upside.

For the Aussie Dollar

It was a busy week.

Key stats included manufacturing, trade, business confidence, and retail sales figures.

In January, manufacturing sector activity picked up, with the AIG Manufacturing Index rising from 52.1 to 55.3.

Trade data was also skewed to the positive along with business confidence figures.

In December, the trade surplus widened from A$5.022bn to A$6.785bn.

For the 4th quarter, the NAB Business Confidence Index rose from -8 to +14.

On the negative was a 4.1% fall in retail sales in December. The decline had come off the back of a 7.1 rebound in November, however.

On the monetary policy front, the RBA was also in action in the week.

While holding the cash rate unchanged at 0.1%, the RBA caught the markets by surprise, increasing its bond purchases by A$100bn.

At the end of the week, the RBA’s statement on monetary policy weighed on the Aussie Dollar early in the session. This was in spite of upward revisions to growth and employment forecasts.

Talk of extended policy support and uncertainty over what lies ahead had tested Aussie Dollar support before the Friday rally.

For the Kiwi Dollar

It was a relatively quiet week.

4th quarter employment and December building consents were in focus in the week.

The stats were skewed to the positive, with employment rising by 0.6% in the 4th quarter. Economists had forecast a 0.8% decline following a 0.8% decline in the 3rd quarter.

As a result, the unemployment rate fell from 5.3% to 4.9% versus a forecasted rise to 5.6%.

Building consents were on the rise at the end of the year, jumping by 4.9%. In November, consents had risen by 1.2%.

For the Japanese Yen

It was a relatively quiet week.

Finalized private sector PMI figures for January were in focus in the 1st half of the week.

Both the manufacturing and services sectors continued to contract at the start of the year.

The Services PMI came in at 46.1, with the Manufacturing PMI coming in at 49.8. In December, the PMIs had stood at 47.7 and 50.0 respectively.

At the end of the week, household spending figures were skewed to the positive, however.

Month-on-month, household spending rose by 0.9%, partially reversing a 1.8% fall from November. Economists had forecast a 1.9% slide.

Year-on-year, however, spending was down by 0.6%. Economists had forecast a 2.4% fall.

The Japanese Yen fell by 0.68% to ¥105.39 against the U.S Dollar. In the week prior, the Yen had declined by 0.87% to ¥104.68.

Out of China

It was a relatively quiet week on the data front.

The market’s preferred Caixin private sector PMIs for January were in focus early in the week.

In January, the manufacturing PMI fell from 53.0 to 51.5, with the services PMI sliding from 56.3 to 52.0.

The PMIs had followed the NBS numbers from the weekend that had also been skewed to the negative.

In the week ending 5th February, the Chinese Yuan fell by 0.58% to CNY6.4658. In the week prior, the Yuan had risen by 0.83% to CNY6.4283.

The CSI300 rose by 2.46%, with the Hang Seng ended the week up by 3.55%.

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

On the Macro

It’s a busy week ahead on the economic calendar, with 66 stats in focus in the week ending 5th February. In the week prior, 57 stats had been in focus.

For the Dollar:

It’s another busy week ahead.

Private sector PMI and labor market figures are the key stats due out in the week.

On Monday, the ISM Manufacturing PMI for January will be in focus ahead. There would have to be a marked decline, however for the PMI to weigh on risk sentiment.

The focus will then shift to the market’s preferred ISM Non-manufacturing PMI and ADP nonfarm employment figures due out on Wednesday.

While we will expect the ADP numbers to influence, the non-manufacturing PMI will likely be the key driver.

On Thursday, the weekly jobless claims figures will be in focus ahead of nonfarm payroll and unemployment numbers on Friday.

Other stats in the week include finalized Markit PMI figures, along with factory orders and trade data. These stats will likely have a muted impact on market risk sentiment, however.

The Dollar Spot Index ended the week up by 0.38% to 90.584.

For the EUR:

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

In the 1st half of the week, private sector PMI figures for Italy and Spain are due out on Monday and Wednesday.

Finalized numbers for France, Germany, and the Eurozone will also influence along with German retail sales figures on Monday.

1st estimate GDP numbers for the Eurozone will also draw plenty of attention on Tuesday.

The focus will then shift to the ECB Economic Bulletin on Thursday German factory orders on Friday.

Other stats include finalized January inflation figures and unemployment and retail sales figures for the Eurozone. Barring particularly dire numbers, however, these should have limited impact on the EUR.

The EUR ended the week down by 0.29% to $1.2136.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include finalized private sector PMI figures for January and January’s construction PMI.

On Thursday, however, the main event will be the BoE’s first monetary policy decision of the year.

Following particularly disappointing prelim January PMI figures, will the BoE get the markets ready for more easing?

The markets are expecting the BoE to stand pat this week.

The Pound ended the week up by 0.16% to $1.3708.

For the Loonie:

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

Employment, trade, and Ivey PMI figures are due out. The markets will need to wait until Friday for the numbers, however.

Expect the employment and trade figures to have the greatest impact at the end of the week.

From elsewhere, private sector PMI numbers from China and the U.S will also influence in the week along with the weekly crude oil inventory numbers. Expect OPEC’s meeting in the week to also provide direction.

The Loonie ended the week down by 0.35% to C$1.2777 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

January manufacturing sector stats get the week going on Monday ahead of trade and retail sales figures on Thursday and Friday.

While we can expect the stats to influence, the RBA monetary policy decision will also draw attention on Tuesday.

With no moves anticipated, the rate statement will be the key driver.

Building approvals due out on Wednesday should have a muted impact, however.

From elsewhere, private sector PMI figures from China will also provide direction in the week.

The Aussie Dollar ended the week down by 0.92% to $0.7644.

For the Kiwi Dollar:

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

Economic data is limited to 4th quarter employment figures, due out on Wednesday.

With little else for the markets to consider, expect the numbers to influence.

Building consent numbers due out on Thursday should have a muted impact on the Kiwi.

From elsewhere, China’s private sector PMI figures will also provide the Kiwi with direction.

The Kiwi Dollar ended the week up by 0.06% to $0.7193.

For the Japanese Yen:

It is a relatively quiet week ahead.

Finalized private sector PMIs for January are due out ahead of household spending figures on Friday.

Expect the household spending figures to garner the greatest attention in the week.

Ultimately, however, COVID-19 news updates will continue to be the key driver.

The Japanese Yen ended the week down by 0.87% to ¥104.68 against the U.S Dollar.

Out of China

It’s busier week ahead.

The market’s preferred Caixin manufacturing PMI on Monday will set the tone.

On Wednesday, the services PMI will also draw interest as the markets look for a pickup in private sector activity.

Before the start of the week, the NBS private sector PMIs were out on Sunday morning.

The NBS Manufacturing PMI fell from 51.9 to 51.3 in January, with the non-manufacturing PMI falling from 55.7 to 52.4.

Away from the economic calendar, expect COVID-19 news from China to also influence.

The Chinese Yuan ended the week up by 0.83% to CNY6.4283 against the U.S Dollar.

Geo-Politics

U.S Politics

Stimulus talk and foreign policy moves by U.S President Joe Biden will be key in the week.

Following 4th quarter GDP figures from last week, vaccination and infection rates will be a key area of focus.

The U.S administration has pledged 100 million vaccinations in 100 days. A marked pickup in vaccination rates would support riskier assets.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Expect plenty of focus on the U.S and the EU in particular, which continues to face supply issues.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S, key names include but are not limited to:

Alphabet Inc. (Tue), Amazon.com Inc. (Tue), Exxon Mobil Corp. (Tue), Pfizer Inc. (Tue), Ford Motor Co. (Thur).

The Week Ahead – The FED, 4th Quarter GDP Numbers, COVID-19, and U.S Politics in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 55 stats in focus in the week ending 29th January. In the week prior, 74 stats had been in focus.

For the Dollar:

It’s a busier week ahead.

On Tuesday, consumer confidence figures for January will draw interest.

Another fall in consumer confidence would test support for riskier assets early on.

Mid-week, core durable goods and durable goods orders for December will provide direction.

The focus will then shift to 4th quarter GDP figures due out on Thursday. While growth will be slower than the 3rd quarter rebound, what impact the 2nd wave of the pandemic has had remains to be seen.

Weekly jobless claims figures will also draw interest on Thursday. A marked decline would support riskier assets.

On Friday, December inflation and personal spending figures, along with January’s PMI for Chicago wraps things up.

Other stats including housing sector and trade figures and finalized consumer sentiment figures should have a muted impact on the markets.

On the monetary policy front, however, the FOMC monetary policy decision on Wednesday is the main event.

Following FED Chair Powell’s assurances of no rate hikes or tapering of bond purchases, the statement will need to be aligned.

The Dollar Spot Index ended the week down by 0.59% to 90.238.

For the EUR:

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

In the 1st half of the week, German business Sentiment and consumer confidence figures will be in focus.

Expect plenty of EUR sensitivity to the numbers.

The focus will then shift to 4th quarter GDP numbers on Friday. French, German, and Spanish GDP numbers are due out.

Expect Germany and France’s GDP numbers to have the greatest impact on the EUR.

French consumer spending and German unemployment numbers will also provide direction on Friday.

Other stats include prelim inflation figures for January. Barring a marked slide in consumer prices, however, the numbers should have a muted impact on the EUR.

On the monetary policy front, ECB President Lagarde is scheduled to speak on Monday. Expect any forward guidance to move the dial.

The EUR ended the week up by 0.74% to $1.2171.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include claimant count figures for December and the unemployment rate for November, due out on Tuesday.

Earnings and 3-month rolling employment figures should have less influence on the day.

With no other stats to consider in the week, COVID-19 will remain a key driver.

The Pound ended the week up by 0.71% to $1.3686.

For the Loonie:

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

Building permit, GDP, and RMPI figures.

Expect November GDP and December RMPI figures on Friday to have the greatest influence on the Loonie.

From elsewhere, 4th quarter GDP numbers together with COVID-19 news updates will likely be the key drivers, however.

The Loonie ended the week down by 0.01% to C$1.2733 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busy week on the economic data front. The markets will need to wait until Wednesday for the first set of numbers, however.

Business confidence and inflation figures will draw interest on Wednesday.

At the end of the week, private sector credit numbers are also due out. Barring dire numbers, however, the numbers should have a muted impact on the Aussie Dollar on Friday.

From elsewhere, GDP figures from the U.S and the EU and COVID-19 news updates will also be key drivers in the week.

The Aussie Dollar ended the week up by 0.16% to $0.7715.

For the Kiwi Dollar:

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

Economic data is limited to December trade data, due out on Thursday.

With little else for the markets to consider, expect the numbers to influence.

The Kiwi Dollar ended the week up by 0.79% to $0.7189.

For the Japanese Yen:

It is a busy week ahead.

December retail sales figures on Thursday will draw plenty of interest.

At the end of the week, inflation and prelim industrial production figures will also provide direction.

Ultimately, however, vaccination rates and the trends in new COVID-19 cases will remain key drivers.

The Japanese Yen ended the week up by 0.07% to ¥103.78 against the U.S Dollar.

Out of China

It’s quiet week ahead.

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

Following the recent spike in new COVID-19 cases, expect COVID-19 updates from China to influence, however.

The Chinese Yuan ended the week down by 0.02% to CNY6.4819 against the U.S Dollar.

Geo-Politics

 

U.S Politics

Stimulus talk and other policy moves by U.S President Joe Biden will be key in the week.

Progress on Biden’s vaccination target of 100 million vaccinations in the 1st 100 days should support riskier assets.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S

Key names include but are not limited to:

American Express (Tuesday)

General Electric (Tuesday)

Verizon Communications (Tuesday)

Microsoft Corp. (Tuesday)

Johnson & Johnson (Tuesday)

Apple Inc. (Wednesday)

Boeing Co. (Wednesday)

Facebook Inc. (Wednesday)

Tesla Inc. (Wednesday)

Visa (Wednesday)

 

 

The Weekly Wrap – Economic Data, COVID-19, and U.S Politics Were in Focus

The Stats

It was a busy week on the economic calendar, in the week ending 22nd January.

A total of 74 stats were monitored, following 46 stats from the week prior.

Of the 74 stats, 37 came in ahead forecasts, with 31 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.

Looking at the numbers, 37 of the stats reflected an upward trend from previous figures. Of the remaining 37 stats, 31 reflected a deterioration from previous.

For the Greenback, it was back into the red after two consecutive weekly gains, with the Dollar Spot Index falling by 0.59% to $90.238. In the previous week, the Dollar had risen 0.75% to 90.772.

Out of the U.S

It was a relatively quiet week on the economic data front, with no stats through the 1st half of the week.

On Thursday, a fall in the jobless claims from 926k to 900k in the week ending 15th January failed to impress.

Philly FED Manufacturing numbers were marginally better, with the January PMI up from 11.1 to 26.5.

While the numbers eased demand for the Dollar, the numbers failed to support the U.S equity markets on the day.

On Friday, prelim private sector PMI figures were more impressive, however.

The manufacturing PMI rose from 57.1 to 59.1, with the all-important services PMI rising from 54.8 to 57.5.

Other stats in the week included December housing sector figures that had a muted impact on the majors.

Away from the economic calendar, talk of sizeable stimulus to support the economic recovery sent the Dollar into the red for the week.

In the equity markets, the NASDAQ rallied by 4.19%, with the Dow and the S&P500 gaining 0.59% and 1.94% respectively. Corporate earnings delivered the upside for the NASDAQ in the week.

Out of the UK

It was a relatively busy week on the economic data front.

December inflation figures were in focus in the 1st half of the week.

A pickup in inflationary pressures provided Pound support on Wednesday, leading to a rise to $1.37 levels on Thursday.

The annual rate of inflation picked up from 0.30% to 0.60%, with consumer prices rising by 0.30% in December. Consumer prices had fallen by 0.10% in November.

Adding further support to the Pound was a pickup in wholesale inflationary pressures.

The Producer Price Input Index rose by 0.80% in December, following a 0.40% increase in November.

Stats through the remainder of the week were skewed to the negative, however, leading to a pullback in the Pound on Friday.

While December retail sales came up short of forecasts, it was prelim private sector PMI figures for January that weighed.

The manufacturing PMI fell from 57.5 to 52.9, with the services PMI sliding from 49.4 to 38.8.

In the week, the Pound rose by 0.71% to $1.3686, with a 0.34% fall on Friday paring some of the gains. In the week prior, the Pound had risen by 0.16% to $1.3590.

The FTSE100 ended the week down by 0.60%, following a 2.00% slide from the previous week.

Out of the Eurozone

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

In the 1st half of the week, economic sentiment figures for Germany and the Eurozone were in focus.

The stats were skewed to the positive, with the ZEW Economic Sentiment Indicator for Germany rising from 55.0 to 61.8.

Sentiment towards the Eurozone’s economy also improved, with the indicator rising from 54.4 to 58.3.

On Thursday, consumer confidence waned, however. The Eurozone’s flash consumer confidence index slipped from -13.9 to -15.5.

Wrapping up the week, were January’s prelim private sector PMIs.

It was a mixed bag. The services sector contracted at a faster pace, weighing on the Eurozone’s composite PMI. In January, the Eurozone’s Composite PMI fell from 49.1 to 47.5.

Manufacturing sector activity picked up in France, while activity in Germany eased at the start of the year. As a result, the Eurozone’s manufacturing PMI fell from 55.2 to 54.7.

On the monetary policy front, the ECB stood pat on monetary policy, leaving the focus on the press conference. A cautious tone over concerns of the impact of extended lockdown measures weighed on the European majors. The impact on the EUR was relatively muted, however.

For the week, the EUR rose by 0.74% to $1.2171. In the week prior, the EUR had fallen by 1.11% to $1.2082.

For the European major indexes, it was a mixed week. The DAX30 and the EuroStoxx600 rose by 0.63% and by 0.17% respectively, while the CAC40 fell by 0.93%.

The ECB press conference and private sector PMIs from the Eurozone weighed on the majors late in the week.

For the Loonie

It was a particularly busy week.

Key stats included December inflation and November retail sales figures.

While the core annual rate of inflation held steady at 1.5% in December, consumer prices fell in the month. Core consumer prices fell by 0.4%, with consumer prices falling by 0.2%.

Retail sales figures for November impressed, however. Core retail sales jumped by 2.1%, with retails sales rising by 1.3% in the month.

While the stats were Loonie positive, a bearish end to the week left the Loonie flat. Disappointing crude oil inventory numbers pinned the Loonie back.

On the monetary policy front, the BoC delivered its first monetary policy decision of the year on Wednesday.

There were no major surprises, however.

In the week, the Loonie fell by just 0.01% to C$1.2733. In the week prior, the Loonie had fallen by 0.24% to C$1.2732.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, following losses from the previous week.

In the week ending 22nd January the Aussie Dollar rose by 0.16% to $0.7715, with the Kiwi Dollar ended the week up by 0.79% to $0.7189.

For the Aussie Dollar

It was a relatively quiet week.

Consumer confidence, employment, and retail sales were in focus.

In January, the Westpac Consumer Sentiment Index slipped by 4.5% to 107.0, reversing a 4.1% gain from December.

Retail sales figures from January also disappointed, with sales falling by 4.2%, month-on-month. In December, retail sales had surged by 7.1% as a result of an easing of containment measures in Victoria.

Employment numbers were skewed to the positive, however, with the unemployment rate falling from 6.8% to 6.6%.

Employment rose by 50.0k in December, following on from a 90.0k jump in November.

Full employment rose by 35.7k in the month. In November, full employment had risen by 84.2k.

While the numbers were positive, the fall in the unemployment rate was largely attributed to a rise in part-time employment. This was ultimately Aussie Dollar negative on the release.

For the Kiwi Dollar

It was relatively busy week.

Business confidence, retail sales, business PMI, and inflation figures were in focus.

In the 4th quarter, Business confidence improved, with the NZIER Business Confidence Index rising from -38% to -16%.

Electronic card retail sales also delivered support, with December sales up by 3.5% year-on-year. In November, sales had been up by 1.4%.

It was a mixed set of numbers at the end of the week, however.

The Business PMI slid from 55.3 to 48.7 in December, weighing on the Kiwi.

Inflation figures provided support, however, with the annual rate of inflation holding steady at 1.4% in Q4. Economists had forecast an annual rate of inflation of 1.0%.

Quarter-on-quarter, consumer prices rose by 0.5%, following a 0.7% increase in the 3rd quarter.

For the Japanese Yen

It was a busy week.

Industrial production fell by 0.5% in November, partially reversing a 4.0% rise in October.

Trade data was skewed to the positive, however, with the trade surplus widening from ¥366.1bn to ¥751.0bn.

Exports rose by 2%, while imports slumped by 11.6%.

While exports to China rose by 2.7%, exports to the U.S tumbled by 17.3%, with exports to Europe sliding by 15.1%.

At the end of the week, private sector PMI and inflation figures were skewed to the negative.

Core consumer prices fell by 1.0% in December, year-on-year, following a 0.9% decline in November.

Manufacturing sector activity contracted, with the PMI falling from 50.0 to 49.7 in January. The services sector contracted at a faster pace, however, with the PMI sliding from 47.7 to 45.7.

On the monetary policy front, the BoJ was also in action, though there were no moves to impact the Yen.

The Japanese Yen rose by 0.07% to ¥103.78 against the U.S Dollar. In the week prior, the Yen had risen by 0.09% to ¥103.85.

Out of China

4th quarter GDP and December industrial production figures were in focus.

In the 4th quarter, the economy expanded by 2.6%, quarter-on-quarter, following 2.7% growth in the 3rd quarter. Year-on-year, the economy grew by 6.5%, following 4.9% growth in the 3rd quarter.

Industrial production rose by 7.3% year-on-year, in December, following a 7.0% increase in November.

Other stats included fixed asset investment, retail sales, and unemployment figures.

While the unemployment rate held steady at 5.2% retail sales grew by a more modest 4.6%, year-on-year. In November, sales had risen by 5.0%.

Fixed asset investment picked up, however, rising by 2.9% year-on-year. In November, fixed asset investment had risen by 2.6%.

While the stats were skewed to the positive, news of new COVID-19 cases in China tested support for riskier assets.

In the week ending 22nd January, the Chinese Yuan fell by 0.02% to CNY6.4819. In the week prior, the Yuan had fallen by 0.10% to CNY6.4809.

The CSI300 rose by 2.05%, with the Hang Seng ended the week up by 3.06%.

Even When She Speaks Softly, She’s Yellen

After posting the first back-to-back decline this year, the MSCI Asia Pacific Index bounced back today, led by a 2.7% gain in Hong Kong (20-month high) and a 2.6% rise in South Korea’s Kospi. The Nikkei and Taiwan’s Stock Exchange rose by more than 1%. Europe’s Dow Jones Stoxx 600 eked out a small gain yesterday and is a little higher today. The S&P 500 fell in the last two sessions for a loss of a little more than 1% and is trading about 0.6% better now.

The US 10-year is firm at 1.11%, while European bonds are little changed, and the periphery is doing better than the core. Of note, France’s 50-year bond sale was greeted with a record reception. The dollar is lower against all the major currencies, but the yen. Most emerging market currencies are firmer as well. We see the dollar’s pullback as part of the larger correction that began almost two weeks ago.. Gold recovered smartly from yesterday’s test on $1800 to return to the 200-day moving average (~$1845). February WTI reversed lower ahead of the long holiday weekend and made a marginal new low today (~$51.75) before recovering nearly a dollar.

Asia Pacific

According to the recent government data, China’s rare earth exports fell by more than a quarter to what Reuters estimates are the lowest in five years. China attributed it to weaker global demand, but there is something else going on. Yesterday, China indicated that a new mechanism will be created to decide, coordinate, and regulate the rare earth supply chain (including mining, processes, and exporting).

Rather than exporting rare earths, China’s industrial policy aims to export products containing rare earths. Move up the value-added chain. The big push now apparently is for batteries for electric vehicles. The PRC has become a net importer of rare earths that it processes. Its imports often come from mines it owns outright or has an important stake. For example, the Democratic Republic of Congo is responsible for 60% of the world’s cobalt.

There are 12 mines, and reports suggest China has a stake in each, and more than 85% of the cobalt exports are headed to China. In 2018, China provided around 80% of US rare earths, and at least one mine in the US sends the material to China to be processed.

For the past several sessions, the dollar has forged a base in the JPY103.50-JPY103.60 area and is probing the JPY104.00 level. The high from January 14 was about JPY104.20, and there is an option for roughly $360 mln at JPY104.35 that expires later today, just shy of last week’s high near JPY104.40. The Australian dollar closed below its 20-day moving average yesterday (~$0.7100) for the first time in a little more than two months.

It rebounded earlier today to $0.7725. The session high may not be in place, and we suspect there is potential toward $0.7740. The dollar’s reference rate was set at CNY6.4883, practically spot-on median expectations in the Bloomberg survey of bank models. The dollar’s four-day advance was snapped today. It has risen from almost CNY6.45 and stalled in front of CNY6.50. Faced with an increase in interbank borrowing costs for the ninth consecutive session, the PBOC injected CNY75 bln in seven-day cash via repo agreements.

It is the first injection after draining for the past six sessions, and it was the largest supply of funds this month. Some liquidity appears to be going into equities, and Chinese traders reportedly bought a record $3.4 bln of HK shares today.

Europe

Despite Germany’s social restrictions, which may be tightened and extended, business sentiment held in better than feared. The ZEW survey assessment of current conditions did not deteriorate as economists expected, though it did not really improve, either. The -66.4 reading compares with -66.5 in December. However, the expectations component rose to 61.8 from 55.0. This is the highest since September and more than anticipated.

The UK Prime Minister, who holds the rotating G7 presidency, has invited South Korea, India, and Australia to the summit in June. Moreover, reports suggest Johnson intends on getting them involved right away, which seems aggressive. It appears to be causing some consternation among other members. Germany, Japan, France, and Italy are opposed.

Italy’s Prime Minister Conte survived the vote of confidence in the Chamber of Deputies yesterday, and today’s challenge is in the Senate. The government support is thinner. However, the ability to secure a majority is somewhat easier given that Renzi’s party will abstain, though it will still be close. A defeat could see Italian bonds sell-off, but Conte will seek to broaden the coalition in the existing parliament before elections are required. This could include independents or members of center-right parties.

Two central bank intervention announcements last week caught our attention. First, Sweden’s Riksbank announced a three-year plan to purchase SEK5 bln a month. The purpose is to fund reserve purchases in SEK and pay down the SEK178 bln fx loans from the National Debt Office, which is thought to be about 70% in US dollars.

The krona was trending lower this year against both the dollar and euro, which follows the krona’s appreciation in the last few months of 2020. The impact is minor in terms of average daily turnover, estimated to be around SEK300-SEK320 bln almost equally divided between euros and dollars.

Second, the Israeli shekel soared in recent months and reached levels not seen since Q1 1996. The Bank of Israel intervened and bought $21 bln in all of 2020, with almost $4.5 bln in December alone, and still the shekel appreciated by 7.5% and nearly 3%, respectively. Businesses and investors were crying for relief. The central bank announced it would buy $30 bln this year, which triggered a powerful short-covering rally that carried the dollar from nearly ILS3.11 to almost ILS3.29 by the end of last week.

Dollar sellers emerged yesterday. It is steadier today, but in wider ranges than typically seen before. Its preannounced intervention war chest may ultimately prove insufficient to prevent shekel appreciation. The $30 bln is roughly twice its current account surplus, but foreign direct investment inflows are nearly the same size as the current account surplus. And yet, net portfolio inflows should be expected, but most importantly, how Israeli offshore investment is managed can be impactful.

Profit-taking on foreign investments or hedging the currency risk, even on a small fraction of the roughly $470 bln of foreign stocks and bonds owned by Israelis, can be a significant force rivaling the current account and direct investment-related flows.

The euro was sold a little below $1.2060 yesterday, its lowest level since December 1st. It reached $1.2130 in the European morning, and the $1.2140 area is the halfway point of last week’s decline. The bounce has left the euro’s intraday momentum indicator stretched.

We expect North American dealers will take advantage of the upticks for a better selling opportunity. Also, note there are around 4.1 bln euros of $1.2190-$1.2200 options that roll-off today. Sterling recovered a little more than a cent from yesterday’s lows (~$1.3520) to today’s high. It faces resistance near $1.3635. Tomorrow the UK reports December CPI figures, and a small uptick is expected.

America

The Senate holds the confirmation hearing for Yellen. She was the first woman to head the Federal Reserve, and she will be the first woman to lead the US Treasury, and the first person to have held both posts. It is a reflection of our age. Like the current Federal Reserve, the former Chair can be expected to recognize the need for fiscal support, while at the same time acknowledging that deficits will decline on the other side of the emergency.

The stock of debt is elevated, but it not extreme in relative or absolute terms. Despite higher debt in 2020, the servicing costs appear to have fallen. Moreover, as the economy grows faster than the level of interest rates, debt will decline as a percentage of GDP. Her remarks on the dollar will be scrutinized. To demonstrate the Biden Administration’s multilateral thrust, at this juncture, it is sufficient for Yellen to acknowledge the G7/G20 position that exchange rates are best set by the market.

At the end of last year, the US Treasury cited Switzerland and Vietnam as currency manipulators. She may be asked about those, and of course, the yuan. The new US Treasury model had the yuan a few percentage points undervalued. However, it is interesting to note that when adjusted for GDP per capita, The Economist Big Mac index of purchasing power parity has the yuan slightly (~2.5%) overvalued.

The economic calendars for North America are light today. The Treasury’s International Capital (TIC) for November will be reported today at the end of equity trading. Capital flows were volatile at the onset of the pandemic, but long-term inflows averaged $23.56 bln in the first ten months of 2020 compared with an average of $27.21 bln in the same period in 2019 and $54.32 bln in the Jan-Oct period in 2018.

The week’s highlight includes the January Philadelphia Fed survey Thursday and weekly jobless claims, as well as Friday’s preliminary PMI. Canada reports the December CPI tomorrow, shortly before the outcome of the Bank of Canada meeting is announced. Although the consensus is for a standpat outcome, a “mini-cut” cannot be ruled out given the official rhetoric. The current overnight target rate is 25 bp. The main feature for Mexico is the December unemployment figures on Thursday. Brazil’s central bank meets tomorrow, and the is little chance of a change in the 2% Selic rate.

Last Thursday, the US dollar recorded its lowest level against the Canadian dollar since April 2018 (~CAD1.2625). Between the modest greenback strength seen yesterday and expectations that Biden cancels the XL pipeline, the US dollar tested CAD1.28. It has come back offered today and is testing the CAD1.2720 area in the European morning.

It can fall a bit further in the North American session, but we look for support in the CAD1.2690 area to hold. That said, a break could signal a move toward CAD1.2640. The greenback held below MXN20.00 yesterday and reversed lower, closing a little under MXN19.69. It has taken out yesterday’s low (~MXN19.66) but struggles to maintain the downside momentum. A move above MXN19.75 would suggest a return to MXN20.00 is likely.

The dollar fell from BRL5.5160 last week, its highest level since mid-Movember, to BRL5.20. The low from earlier this month was around BRL5.12, and there is scope for a re-test.

This article was written by Marc Chandler, MarctoMarket.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – U.S Politics, Monetary Policy, Economic Data, and COVID-19 in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 73 stats in focus in the week ending 22nd January. In the week prior, 46 stats had been in focus.

For the Dollar:

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

In a shortened week, there are no material stats to consider in the 1st half of the week.

Through Thursday, Philly FED Manufacturing PMI and weekly jobless claims figures are in focus.

With market attention to labor market conditions, expect the jobless claims to have the biggest impact. Another jump in jobless claims would likely weigh on riskier assets.

At the end of the week, prelim private sector PMI figures for January wrap things up.

Housing sector data also due out in the week will likely have a muted impact on the Dollar and risk sentiment.

The Dollar Spot Index ended the week up by 0.75% to 90.772.

For the EUR:

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

On Tuesday, January ZEW Economic Sentiment figures for Germany and the Eurozone kick things off.

Germany’s ZEW Economic Sentiment indicator will likely be the key driver.

The focus will then shift to January prelim private sector PMI numbers on Friday. France, Germany, and the Eurozone’s private sectors will be in the spotlight on.

Expect Germany’s manufacturing and the Eurozone’s composite to be the key drivers.

Finalized December inflation figures for member states and the Eurozone, also due out in the week, will likely have a muted impact on the EUR.

On the monetary policy front, the ECB is in action on Thursday. No moves are expected, leaving the press conference as the key driver. Questions on the economic outlook are likely as EU member states extend lockdown periods.

The EUR ended the week down by 1.11% to $1.2082.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. Key stats include December inflation and retail sales figures, CBI industrial trend orders, and prelim January private sector PMIs.

Expect the retail sales figures and services PMI, due out on Friday, to have the greatest influence.

Away from the economic calendar, COVID-19 news will also influence. Following the vaccine approvals, the markets will be looking for new COVID-19 cases to begin abating.

On the monetary policy front, BoE Governor is scheduled to speak on Wednesday.

The Pound ended the week up by 0.16% to $1.3590.

For the Loonie:

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

Key stats include December inflation and November retail sales figures due out on Wednesday and Friday.

Other stats include housing stats, manufacturing and wholesale sales figures. We would expect these stats to have a muted impact on the Loonie, however.

On the monetary policy front, the BoC is in action on Wednesday. With the markets expecting the BoC to hold rates steady, the rate statement and press conference will be the key drivers.

From elsewhere, economic data from China and private sector PMIs from the Eurozone and the U.S will also influence.

Expect COVID-19 news updates and chatter from Capitol Hill to also provide direction.

The Loonie ended the week down by 0.24% to C$1.2732 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

Consumer sentiment figures for January are due out on Wednesday.

With consumer confidence key to fueling a pickup in consumer spending and an economic recovery, expect Aussie Dollar sensitivity to the numbers.

On Thursday, December employment figures will also provide direction ahead of retail sales figures on Friday.

Economic data from China and private sector PMI numbers from the U.S and the Eurozone will also influence.

COVID-19 news updates will remain a key driver in the week. however.

The Aussie Dollar ended the week down by 0.70% to $0.7703.

For the Kiwi Dollar:

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

In the 1st half of the week, 4th quarter business confidence and electronic card retail sales figures are in focus on Tuesday.

At the end of the week, Business PMI and 4th quarter inflation figures wrap things up.

Expect business confidence, retail sales, and 4th quarter inflation figures to be the key drivers.

The Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Japanese Yen:

It is a busy week ahead.

Finalized November industrial production figures get things going on Monday.

On Thursday, December trade figures will draw plenty of attention. With the COVID-19 pandemic continuing to wreak havoc, weak numbers could test market risk appetite.

At the end of the week, December inflation figures and prelim private sector PMIs for January wrap things up. The PMI numbers should have greater influence at the end of the week.

On the monetary policy front, the BoJ is in action on Thursday.

The Japanese Yen ended the week up by 0.09% to ¥103.85 against the U.S Dollar.

Out of China

It’s also a busy week ahead.

December industrial production and 4th quarter GDP numbers are due out on Monday. These will be the key stats of the week.

Other stats include fixed asset investment, retail sales, and unemployment figures. Barring dire numbers, however, these stats should have limited impact on market risk sentiment.

On Wednesday, the PBoC is also in action. However, the markets are not expecting any moves.

The Chinese Yuan ended the week down by 0.10% to CNY6.4809 against the U.S Dollar.

Geo-Politics

U.S Politics

It’s a busy week on Capitol Hill.

Inauguration Day and Trump’s impeachment will draw interest.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support optimism towards an economic recovery.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S

These include:

Bank of America (Tues)

Goldman Sachs Group (Tues),

Netflix (Tues)

United Airlines (Wed)

Morgan Stanley (Wed)

Intel Corp. (Thurs).

The Weekly Wrap – COVID-19, Economic Data, and U.S Stimulus Weigh on Riskier Assets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 15th January.

A total of 46 stats were monitored, following 61 stats from the week prior.

Of the 46 stats, 21 came in ahead forecasts, with 17 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 17 of the stats reflected an upward trend from previous figures. Of the remaining 29 stats, 23 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive weekly gain, with the Dollar Spot Index rising by 0.75% to $90.772. In the previous week, the Dollar had risen 0.18% to 90.098.

Out of the U.S

It was a relatively busy week on the economic data front.

It was a quiet 1st half of the week, however, with stats limited to JOLTs job openings and inflation figures.

While job openings fell in November, inflation held steady, with the annual rate of core inflation holding at 1.6%.

Consumer prices rose by 0.4%, month-on-month, while core consumer prices increased by a modest 0.1%.

In a busy 2nd half of the week, key stats included the weekly jobless claims, retail sales, and consumer sentiment figures.

Jobless claims figure disappointed on Thursday, with initial jobless claims jumping from 784k to 965k.

In December, core retail sales slid by 1.4%, with retail sales falling by 0.7%, both following on from declines in November.

Consumer sentiment figures also disappointed.

According to prelim figures, the Michigan Consumer Sentiment Index fell from 80.7 to 79.2.

The downside was limited, however, supported by COVID-19 vaccines and hopes of a bipartisan shift.

The survey noted that the fall was minor when considering the sharp rise in COVID-19 related deaths, insurrection, and Trump’s impeachment.

Other stats included industrial production, NY Empire State Manufacturing, and business inventory figures. These stats had limited impact on the markets, however.

On the monetary policy front, FED Chair Powell assured the markets that rates were not going up any time soon. The FED Chair also stated that there would be no tapering of bond purchases near-term.

In the equity markets, the NASDAQ and the S&P500 slid by 1.54% and by 1.48% respectively. The Dow fell by a more modest 0.91%.

Out of the UK

It was a relatively busy week on the economic data front.

Monday through Thursday economic data was limited to BRC retail sales and RICS house price figures.

Retail sales rose by a further 4.8% in December, following a 7.7% rise in November according to the BRC.

House prices were also on an upward trend, with the RICS house price balance coming in at 65%. While down marginally from October’s 66%, upward pressure on house prices is expected to remain.

At the end of the week, industrial and manufacturing production and GDP figures were in focus.

In November, industrial production fell by 0.1%, following a 1.1% rise in October. Manufacturing production rose by 0.7%, following a 1.6% increase in October. Both fell short of forecasts.

GDP figures were not much better. In November, the economy contracted by 2.6% reversing 0.4% growth from October. On a 3-month rolling basis, the economy grew by 4.1%, slowing from a 10.2% to October.

Trade data released on Friday had a muted impact on the Pound, however. In November, the trade deficit widened from £13.29bn to £16.01bn, with the non-EU deficit widening from £5.82bn to £8.01bn.

Away from the economic calendar, a pickup in vaccination rates in the UK offset the negative sentiment towards lockdown measures.

In the week, the Pound rose by 0.16% to $1.3590. In the week prior, the Pound had fallen by 0.76% to $1.3568. A 0.72% slide on Friday pared some of the gains from earlier in the week.

The FTSE100 ended the week down by 2.00%, partially reversing a 6.39% gain from the previous week.

Out of the Eurozone

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

Industrial production and trade figures for the Eurozone, together with full year GDP numbers for Germany were in focus.

It was a mixed set of numbers for the EUR and the European majors.

For the Eurozone, industrial production jumped by 2.5% in November, following a 2.3% increase in October.

Trade data disappointed, however, with the trade surplus narrowing from €30.0bn to €25.8bn in November. Weak numbers were expected, however, following Germany’s trade data from last week.

While economic data from Germany has been impressive of late, GDP figures disappointed.

For the full year 2020, the economy contracted by 5.0%, following 0.6% growth in 2019. Economists had forecasted a 5.1% fall, however, which limited the damage.

ECB President Lagarde had spoken the day before the release of the GDP numbers. Lagarde continued to stand by the ECB’s economic forecasts, in spite of the extended lockdown measures in the EU. Lagarde pointed out that the forecasts had factored in lockdowns through the 1st quarter.

At the end of the week, finalized inflation figures for France and Spain had a muted impact on the EUR.

On the monetary policy front, the ECB’s monetary policy meeting minutes also failed to move the dial in the week.

For the week, the EUR slid by 1.11% to $1.2082. In the week prior, the EUR had risen by 0.02% to $1.2218.

For the European major indexes, it was a bearish week. The EuroStoxx600 fell by 0.81%, with the CAC40 and DAX30 sliding by 1.67% and 1.86% respectively.

A continued spike in new COVID-19 cases weighed. Across the EU, member states were reporting particularly low vaccination rates that added to the negative mood.

For the Loonie

It was a particularly quiet week on the economic data front. There were no material stats to provide the Loonie with direction.

At the start of the week, the BoC’s Business Outlook Survey failed to move the dial.

Market optimism, fueled by expectations of a sizeable U.S stimulus package, had supported crude oil prices and the Loonie.

A Friday sell-off, however, left the Loonie in the red. Concerns over the COVID-19 pandemic and market reaction to the Biden stimulus package weighed on riskier assets.

In the week ending 15th January, the Loonie fell by 0.24% to C$1.2732. In the week prior, the Loonie had risen by 0.2% to C$1.2702.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar, following solid gains from the previous week.

In the week ending 15th January the Aussie Dollar fell by 0.70% to $0.7703, with the Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Aussie Dollar

It was a quiet week on the economic calendar.

November retail sales, building permit, and new home loan figures were in focus in the week.

Retail sales impressed in November, supported by an easing of containment measures in Victoria. Sales jumped by 7.1%, following a 1.4% rise in October.

Building permits rose by 2.6%, following a 3.3% increase in October, with new home loans surging by 5.5%.

Home loans hit a record high mid-way through the 4th quarter.

From elsewhere, trade data from China also provided support, with imports and exports on the rise in December.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

For the Japanese Yen

It was a relatively quiet week on the economic calendar. Core machinery orders were in focus in the week.

Month-on-month, orders rose by 1.5% in November, following October’s 17.1% surge. Economists had forecast a 6.2% slide. Year-on-year, orders were down by 11.3%, after having risen by 2.8% in October. Economists had forecast a more severe 15.4% slump.

The stats ultimately had a muted impact on the Japanese Yen, however. COVID-19 news and chatter from Capitol Hill remained key drivers in the week.

The Japanese Yen rose by 0.09% to ¥103.85 against the U.S Dollar. In the week prior, the Yen had fallen by 0.72% to ¥103.94.

Out of China

Inflation and trade data for December were in focus.

The stats were skewed to the positive, supporting riskier assets in the week.

Inflationary pressures returned at the end of the year, with consumer prices rising by 0.7%, month-on-month. In November, consumer prices had fallen by 0.6%. As a result, consumer prices were up by 0.2% year-on-year, partially reversing a 0.5% decline from November.

Wholesale deflationary pressures also eased at the end of the year.

Trade data was more impressive, however, with exports surging by 19.1% following a 21.1% jump in November. Imports increased by 6.5%, leading to a widening in the USD trade surplus from $75.4bn to $78.16bn.

While the stats were positive, a spike in new COVID-19 cases in China was a concern in the week.

In the week ending 15th January, the Chinese Yuan fell by 0.10% to CNY6.4809. In the week prior, the Yuan had risen by 0.81% to CNY6.4746.

The CSI300 slipped by 0.68%, while the Hang Seng ended the week up by 2.50%.

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

On the Macro

It’s a quieter week ahead on the economic calendar, with 42 stats in focus in the week ending 15th January. In the week prior, 61 stats had been in focus.

For the Dollar:

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

In the 1st half of the week, JOLTs job openings and inflation figures are due out.

The numbers are unlikely to have a material impact on the Dollar and market risk sentiment, however.

Expectations are for labor market conditions and consumption to improve as the U.S government administers vaccinations.

In the 2nd half of the week, it gets a little busier.

The weekly jobless claims figures will draw attention on Thursday.

At the end of the week, consumer sentiment and industrial production will also provide direction.

On the monetary policy front, FED Chair Powell could move the dial on Thursday.

Away from the economic calendar, expect chatter from Capitol Hill and COVID-19 news to also influence.

The Dollar Spot Index ended the week up by 0.18% to 90.098.

For the EUR:

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

Industrial production and trade data for the Eurozone are due out on Wednesday and Friday.

We would expect the industrial production figures to garner the greatest interest.

Finalized December inflation figures for Spain and France are also due out. These are likely to have a muted impact on the EUR, however.

On the monetary policy front ECB President Lagarde has 2 scheduled speeches in the 1st half of the week. Expect any forward guidance to influence. On Thursday, the ECB’s monetary policy meeting minutes are also due out but should have a muted impact.

The EUR ended the week up by 0.02% to $1.2218.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. Key stats include November industrial and manufacturing production, and GDP figures for November.

December retail sales and November trade figures are also due out but would likely have a muted impact on the Pound.

Away from the economic calendar, expect COVID-19 news to also influence. With the UK in lockdown, strong progress towards the vaccination of priority groups should ease pressure on the Pound.

The Pound ended the week down by 0.76% to $1.3568.

For the Loonie:

It’s a particularly quiet week ahead.

There are no material stats to provide direction in the week.

The lack of stats will leave the Loonie in the hands of crude oil inventory numbers and COVID-19 news updates.

OPEC’s monthly report will also provide direction.

The Loonie ended the week up by 0.20% to C$1.2702 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

November retail sales figures are due out on Monday along with consumer sentiment numbers on Tuesday

With no other stats to consider, expect plenty of interest in the numbers. For the RBA, consumer consumption remains key to any economic recovery.

Away from the economic calendar, COVID-19 news will remain a key driver in the week.

The Aussie Dollar ended the week up by 0.82% to $0.7757.

For the Kiwi Dollar:

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

Key stats include building consent figures and electronic card retail sales figures.

Expect electronic card retail sales figures to have the greatest impact in the week.

Away from the calendar, COVID-19 will continue to provide direction. Any supply hiccups issues would test support for the Kiwi Dollar.

The Kiwi Dollar ended the week up by 0.75% to $0.7242.

For the Japanese Yen:

It is a particularly quiet week ahead.

Economic data is limited to November current account figures that are likely to have a muted impact on the Yen.

The focus will remain on COVID-19 updates and sentiment towards the economic outlook. A spike in new COVID-19 cases in Japan will be of concern, with the economy continuing to struggle.

The Japanese Yen ended the week down by 0.72% to ¥103.94 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead.

December inflation and trade figures are due out on Monday and Thursday.

While inflation figures will influence, expect trade data to have the greatest impact.

The Chinese Yuan ended the week up by 0.81% to CNY6.4746 against the U.S Dollar.

Geo-Politics

U.S Politics

U.S politics will likely remain the key drive in the week ahead.

Following the scenes on Capitol Hill, the Democrats are looking to oust Trump from office.

Trump is unlikely to go quietly, however. His actions have split the Republican Party. He has also united the Democrats, who now have control of both Houses.

With Inauguration Day approaching, the markets will be looking for Biden’s early goals.

News of plans to deliver further stimulus details this week should support riskier assets further.

The Weekly Wrap – U.S Politics, Stats, and COVID-19 Vaccine News were Key Drivers

The Stats

It was a particularly busy week on the economic calendar, in the week ending 8th January.

A total of 61 stats were monitored, following 15 stats from the week prior.

Of the 61 stats, 23 came in ahead forecasts, with 33 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 20 of the stats reflected an upward trend from previous figures. Of the remaining 41 stats, 34 reflected a deterioration from previous.

For the Greenback, it was a mixed week. After falling to a week low 89.209, the U.S Dollar Spot Index rebounded to end the week up by 0.18% to 90.098. The weekly gain marked a 3rd gain in 8-weeks. In the week prior, the Dollar Spot Index had fallen by 0.32% to end the week at 89.937.

In the week, the Democrats won the Senate race, delivering expectations of substantial fiscal support. Optimism towards the economic outlook was also fueled by COVID-19 vaccine news.

Out of the U.S

It was a relatively busy week on the economic data front.

Private sector PMI and labor market numbers were the key drivers in the week.

In December, the ISM Manufacturing PMI rose from 57.6 to 60.7, with the Services PMI climbing from 55.9 to 57.2.

A 123k fall in nonfarm payrolls in December, according to the ADP failed to spook the markets ahead of the official government figures.

In the week ending 1st January, initial jobless claims slipped from 790k to 787k.

At the end of the week, nonfarm payrolls fell by 140K in December, partially reversing a 336k increase in November.

In spite of the fall, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

In the equity markets, the S&P500 and Dow rose by 1.61% and by 1.83% respectively. The NASDAQ led the way, however, rallying by 2.43%.

Out of the UK

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

Finalized manufacturing and service sector PMI and Construction PMI figures for December were in focus.

The stats were skewed to the negative, with services PMI, composite PMI, and construction PMI coming up short of expectations.

An upward revision to December’s manufacturing PMI was brushed aside, with service sector activity key.

At the end of the week, December house price figures numbers had a muted impact.

With stats skewed to the negative, a reintroduction of lockdown measures added further pressure on the Pound in the week.

Ongoing vaccinations, following the approval of the AstraZeneca vaccine limited the downside, however.

In the week, the Pound fell by 0.76% to $1.3568. In the week prior, the Pound had risen by 0.85% to $1.3672.

The FTSE100 ended the week up by 6.39%, reversing a 0.64% loss from the previous week.

Out of the Eurozone

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

Private sector PMI figures for Italy and Spain and finalized figures for France, Germany, and Italy were in focus.

From Germany, retail sales, unemployment, factory orders, industrial production, and trade figures also influenced.

French consumer spending numbers also drew interest at the end of the week.

Eurozone unemployment, retail sales, trade data, and inflation figures had a muted impact on the EUR and European majors, however.

It was a mixed bag on the economic data front.

Manufacturing sector activity picked up in December, supported by another sharp increase in new orders.

Service sector conditions improved, though not enough for the sector to return to expansion.

Economic data from Germany was also impressive.

Retail sales saw an unexpected rise in November, with unemployment seeing a surprise fall to leave the unemployment rate at 6.1%.

Factory orders and industrial production also saw further upside in November, while trade data disappointed. In November, Germany’s trade surplus narrowed from €18.2bn to €16.4bn.

French consumer spending also disappointed, with lockdown measures in November weighing. Spending tumbled by 18.9% in November, reversing a 3.9% rise from October.

While economic data from Germany impressed, an extension to lockdown measures in Germany limited the impact of dated numbers.

France was also considering a reintroduction of lockdown measures, adding further pressure on the EUR.

Approval of the Moderna Inc. vaccine, however, limited the impact of planned containment measures in the week.

For the week, the EUR rose by 0.02% to $1.2218. In the week prior, the EUR had risen by 0.18% to $1.2215.

For the European major indexes, it was another bullish week. The EuroStoxx600 rallied by 3.04%, with the CAC40 and DAX30 gaining 2.80% and 2.41% respectively.

U.S politics and vaccine approvals contributed to the upside for the majors in the week.

For the Loonie

It was a relatively busy week on the economic data front. November trade and December Unemployment figures were key stats in the week.

In November, the trade deficit narrowed from C$3.73bn to C$3.34bn.

Employment figures were skewed to the negative, however, with employment falling by 62.6K. As a result of the decline, Canada’s unemployment rate ticked up by 8.5% to 8.6%.

Other stats in the week included RMPI and Ivey PMI numbers that had a muted impact in the week.

Supporting the upside for the Loonie, however, was a jump in crude oil prices and hopes of more U.S stimulus.

In the week ending 8th January, the Loonie rose by 0.20% to C$1.2702. In the week prior, the Loonie had risen by 1.06% to C$1.2728.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, following solid gains from the previous week.

In the week ending 8th January the Aussie Dollar rose by 0.82% to $0.7757 with the Kiwi Dollar ending the week up by 0.75% to $0.7242.

For the Aussie Dollar

It was a quiet week on the economic calendar.

November building approvals and trade data were in focus in the week.

It was a mixed bag on the economic data front, however. While building approvals were on the rise, Australia’s trade surplus narrowed from A$7.456bn to A$5.022bn.

In spite of the narrowing, the Aussie Dollar found strong support on optimism towards the economic outlook.

Expectations of more U.S stimulus and the ongoing COVID-19 vaccinations delivered support for riskier assets.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of COVID-19 news and U.S politics in the week.

For the Japanese Yen

It was a relatively busy week on the economic calendar. Finalized privates sector PMI figures for December were in focus, along with November household spending data.

The stats were mixed. While the manufacturing and service sector PMIs saw upward revisions, household spending disappointed.

In November, household spending slid by 1.8%, reversing a 2.1% rise from October.

A jump in new COVID-19 cases in Japan added to the negative sentiment in the week.

The Japanese Yen fell by 0.72 % to ¥103.94 against the U.S Dollar. In the week prior, the Yen had risen by 0.22% to ¥103.20.

Out of China

Private sector PMIs for December were in focus in the first half of the week, with the stats skewed to the negative.

In December, the Caixin Manufacturing PMI fell from 54.9 to 53.0, with the services PMI falling from 57.8 to 56.3

While the stats were on the weaker side, the private sector continued to expand at a solid pace.

On the negative, however, was news of U.S plans to delist Chinese entities from the NYSE.

In the week,  the Chinese Yuan rose by 0.81% to CNY6.4746. In the week prior, the Yuan had risen by 0.22% to CNY6.5272.

The CSI300 rallied by 5.45%, with the Hang Seng ended the week up by 2.38%.

Emerging Asian Currencies Finish Year on Strong Note as Vaccine-Hope Raises Outlook for Global Economy

The weaker U.S. Dollar not only drove the major currencies higher in 2020, but it also had an impressive impact on the emerging Asian currencies. They finished the pandemic-hit year on a mostly positive note, first underpinned by favorable U.S. fiscal and monetary policies then driven higher as broader sentiment was lifted by hopes of a vaccine-led economic recovery. A surge in China’s Yuan also gave regional currencies a boost.

Emerging Currencies in Asia Broadly Firmer

Emerging currencies in the region were broadly firmer after the U.S. Dollar weakened as investors continued to bet that COVID-19 vaccine rollouts will help the global economy toward a more sustainable recovery.

“A smooth vaccine rollout can be a game-changer,” said Christopher Wong, a senior foreign exchange strategist at Maybank.

“Global economy could be closer to a more sustainable recovery trajectory amid unprecedented fiscal and monetary support.”

China’s outperformance also helped regional units, with the Taiwanese Dollar firming about 7% in 2021. Investors have lauded the island’s handling of the pandemic, while a global shift to working remotely boosted demand for its tech products.

Emerging Asia’s currencies stand to benefit from a recovery in economic growth in 2021, with the trade-linked Taiwan Dollar, Singapore Dollar, South Korean Won and Chinese Yuan appearing as winners, whereas low interest-rate and inflation environment should support the region’s carry trade favorites.

The Rapidly Rising Yuan

Setting in motion much of the movement in the region was the extremely strong Chinese Yuan. The Yuan has risen rapidly since May, while posting its first annual gain in three as a weaker U.S. Dollar, the widening yield gap between China and the United States and Beijing’s effective coronavirus containment underpinned gains in the currency.

China’s onshore spot Yuan finished its domestic trading session at 6.5398 per dollar on December 31, strengthening 6.5% against the greenback this year.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Post-Brexit, the Senate Race, and Economic Data in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 58 stats in focus in the week ending 8th January. In the week prior, just 15 stats had been in focus.

For the Dollar:

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

December ISM Manufacturing and Service PMI figures for December are due out on Tuesday and Thursday.

While we expect sensitivity to the manufacturing numbers, the Services PMI will be the key driver.

Expect initial jobless claims figures on Thursday to also draw attention ahead of December NFP numbers on Friday.

With labor market numbers in focus, expect nonfarm payroll figures and the unemployment rate to have the greatest impact.

Other stats include ADP nonfarm employment change, finalized Markit private sector PMI numbers, and factory orders.

The Dollar Spot Index ended the week down by 0.32% to 89.937.

For the EUR:

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

December manufacturing PMI figures for Spain and Italy are due out at the start of the week.

Expect Italy’s manufacturing PMI to draw the greatest interest. With finalized manufacturing from France, Germany, and the Eurozone also due out, any revisions will also provide direction.

On Tuesday, the focus shifts to retail sales and unemployment figures from Germany.

With consumption key to economic recovery, both will provide the EUR with direction.

On Wednesday, Service sector PMIs for Italy and Spain are due out along. Barring dire numbers, however, the focus will be on finalized numbers from France, Germany, and the Eurozone.

Through the 2nd half of the week, the German economy remains in the spotlight.

November factory orders, industrial production, and trade data are due out on Thursday and Friday.

On Friday, French consumer spending figures for November will also draw attention.

While there will be sensitivity to the stats, the markets may be in a forgiving mood.

The ongoing vaccinations across the EU and beyond and optimism towards the economic outlook will likely limit the impact of any disappointing numbers.

Other stats due out include inflation figures from Germany and Italy and retail sales and unemployment numbers for the Eurozone.

These stats are unlikely to have an impact on the EU, however.

The EUR ended the week up by 0.18% to $1.2215.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include finalized private sector PMI numbers for December and construction PMI figures.

Expect any revisions to the services PMI to have the greatest influence.

Other stats include December house price and 3rd quarter labor productivity figures. We would expect the numbers to have a muted impact on the Pound, however.

COVID-19 and updates from Europe on Britain’s 1st week away from the EU will influence.

The Pound ended the week up by 0.83% to $1.3672.

For the Loonie:

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

November’s RMPI is in focus on Tuesday ahead of trade data and December’s Ivey PMI on Thursday.

While we expect some influence from the numbers, December employment figures on Friday will likely have the greatest impact.

From elsewhere, private sector PMIs will influence sentiment towards the economic outlook. The knock-on effects on crude oil prices would also provide the Loonie with direction.

The Loonie ended the week up by 1.06% to C$1.2728 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

November building approval and trade figures are due out on Thursday.

With no other stats to consider, expect the trade figures to garner the greatest interest.

From elsewhere, private sector PMI numbers will also influence market risk sentiment and the Aussie Dollar.

The Aussie Dollar ended the week up by 1.17% to $0.7694.

For the Kiwi Dollar:

It’s another particularly quiet week ahead on the economic calendar. There are no material stats due out to provide the Kiwi Dollar with direction.

Private sector PMIs through the week will influence, however.

The Kiwi Dollar ended the week up by 1.00% to $0.7188.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Finalized private sector PMI figures for December are due out on Monday and Wednesday.

The numbers are unlikely to have any impact on the Yen, however.

At the end of the week, November household spending will draw interest, however.

The Japanese Yen ended the week up by 0.42% to ¥103.20 against the U.S Dollar.

Out of China

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

December private sector PMI numbers are due out on Monday and Wednesday.

While service sector numbers will influence, Monday’s Manufacturing PMI will garner the greatest interest.

The Chinese Yuan ended the week up by 0.22% to CNY6.5272 against the U.S Dollar.

Geo-Politics

U.S Politics

U.S politics will likely remain front and center in a relatively busy week ahead on the economic data front.

The Senate race will draw plenty of interest, with the Georgia runoff on 5th January. A Democrat victory would give the Democrats control of both houses of Congress. While the markets would expect more pandemic aid support, other Biden policies could be a concern.

There’s also Trump lingering in the background…

Brexit

It is Britain’s first week outside of the EU. There’s likely to be plenty of news hitting the wires. Some EU member states are likely to attempt to cause as much disruption as possible.

Border controls and trade will be the main area of focus. Any disruption could test support for the Pound.

One other area of interest will be whether some EU states look to forge bilateral ties with Britain.

The Weekly Wrap – Britain Leaves the EU, amidst Optimism towards 2021

The Stats

It was a particularly quiet week on the economic calendar, in the week ending 1st January.

A total of 15 stats were monitored, following 32 stats from the week prior.

Of the 15 stats, 7 came in ahead of forecasts, with 8 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 7 of the stats reflected an upward trend from previous figures. Of the remaining 8 stats, all 8 reflected a deterioration from the previous.

For the Greenback, it was back into the red to mark a 5th weekly loss in 7-weeks. The Dollar Spot Index fell by 0.32% to end the week at 89.937. In the week prior, the Dollar had risen by 0.27% to 90.257.

Out of the U.S

It was a relatively busy week on the economic data front.

Key stats included November goods trade data, Chicago PMI, and weekly jobless claims figures.

In December, the Chicago PMI rose from 58.2 to 59.5, while the goods trade deficit widened from $80.42bn to $84.82bn.

Also positive was a fall in jobless claims figures. In the week ending 25th December, U.S jobless claims fell back from 806k to 787k.

The jobless claims figures supported the U.S equity markets on the final day of the year.

Other stats included housing sector figures that also failed to move the dial.

In the equity markets, the S&P500 and Dow rose by 1.43% and by 1.35% respectively. The NASDAQ saw a more modest 0.65% gain in the week.

Out of the UK

It was a quiet week on the economic data front.

House price figures for December were the only stats from the UK in the week.

In spite of an uptick in house prices, the numbers had a muted impact on the Pound.

Support came from the Brexit deal and the House of Commons and House of Lords vote in favor of the Bill.

In the week, the Pound rose by 0.85% to $1.3672. In the week prior, the Pound had risen by 0.27% to $1.3560

The FTSE100 ended the week down by 0.64%, reversing a 0.27% loss from the previous week.

Out of the Eurozone

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

Key stats included job seeker figures from France and prelim December inflation figures from Spain.

Neither had an impact on the EUR, however, with optimism towards a 2021 economic recovery supporting the EUR.

The combination of a Brexit deal and the rollout of vaccines across the bloc were key drivers.

For the week, the EUR rose by 0.18% to $1.2215. In the week prior, the EUR had fallen by 0.52% to $1.2193.

For the European major indexes, it was a bullish week. The CAC40 and EuroStoxx600 rose by 0.53% and by 0.77% respectively, with the DAX30 gaining 0.97%.

For the Loonie

It was a particularly quiet week on the economic data front. There were no key stats from Canada to provide the Loonie with direction.

Optimism towards a 2021 economic recovery supported crude oil prices and the Loonie in the week.

U.S stimulus, monetary policy, and the rollout of the COVID-19 vaccines were positive for market risk appetite.

Private sector PMI numbers from China failed to impact, in spite of a marginal softening in private sector activity.

In the week ending 1st January, the Loonie rose by 1.06% to C$1.2728. In the week prior, the Loonie had fallen by 0.60% to C$1.2865.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, which reversed losses from the week prior.

In the week ending 1st January, the Aussie Dollar rallied by 1.17% to $0.7694, with the Kiwi Dollar ending the week up by 1.00% to $0.7188.

For the Aussie Dollar

It was a particularly quiet week on the economic calendar.

There were no material stats from Australia to provide the Aussie Dollar with direction in the week.

The lack of stats left the Aussie Dollar in the hands of market risk sentiment.

COVID-19 vaccinations across key economies and expectation of further relief packages in the US drove demand for riskier assets. Commodity prices were also on the rise in the week as a result. The Bloomberg Commodity Index rose by 1.34% in the week.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of market risk sentiment.

For the Japanese Yen

It was a relatively quiet week on the economic calendar. Prelim industrial production figures for November were in focus.

Following an impressive 4% rise in October, production stalled in November.

Impact on the Yen was limited, however, as Dollar support waned in the week.

The Japanese Yen rose by 0.22% to ¥103.20 against the U.S Dollar. In the week prior, the Yen had fallen by 0.13% to ¥103.43.

Out of China

Private sector PMIs for December were in focus late in the week.

On Thursday, the NBS Manufacturing PMI fell from 52.1 to 51.9, with the services PMI falling from 56.4 to 55.7. As a result, the Composite PMI fell from 55.7 to 55.1.

The impact on the markets was relatively muted with a number of key markets closed on the day.

In the week ending 1st January, the Chinese Yuan rose by 0.22% to CNY6.5272. In the week prior, the Yuan had fallen by 0.03% to CNY6.5418.

The CSI300 rallied by 3.36%, with the Hang Seng ended the week up by 3.20%.

The Week Ahead – Brexit, Capitol Hill, and COVID-19 Remain in Focus

On the Macro

It’s a particularly quiet and shortened week ahead on the economic calendar, with 15 stats in focus in the week ending 1st January. In the week prior, 32 stats had been in focus.

For the Dollar:

It’s a relatively busy week ahead on the economic data front, with U.S stats making up for most of the stats due out.

On Tuesday, Chicago PMI numbers are due out on Wednesday.

Of greatest significance, however, are the all-important initial jobless claims figures that are due out on Thursday.

Other stats including housing sector and trade data that will likely have a muted impact on the Dollar.

It’s a shortened week, with the U.S markets closed on Friday.

The Dollar Spot Index ended the week up by 0.23% to 90.223.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. French jobseeker totals on Monday and prelim inflation figures for Spain on Wednesday are the only stats to consider.

We don’t expect the numbers to have a material impact on the EUR, however.

Economic data from China and Brexit and COVID-19 news will remain the key drivers in the week.

The EUR ended the week down by 0.52% to $1.2193.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar. It’s another shortened week, with the UK markets closed on Monday and Friday and set for an early close on Thursday.

Key stats are limited to December house price figures that will likely have a muted impact on the Pound.

The main area of focus in the week will remain Brexit and updates on COVID-19. For the Pound, the House of Commons vote on 30th December will be the main event.

The Pound ended the week up by 0.27% to $1.3560.

For the Loonie:

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

The lack of stats will leave the Loonie in the hands of COVID-19 news updates in the week.

It’s a shortened week, with the Canadian markets closed on Monday and on Friday.

The Loonie ended the week down by 0.60% to C$1.2865 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no material stats due out to provide the Aussie Dollar with direction.

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however. With the Australian markets closed on Friday and scheduled for an early close on Thursday, we could see a bigger response than normal. The Australian markets are also closed on Monday.

Away from the economic calendar, expect COVID-19 news to also influence.

The Aussie Dollar ended the week down by 0.22% to $0.7605.

For the Kiwi Dollar:

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

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however.

It’s a shortened week, with New Zealand also on holiday on Monday and Friday and set for an early close on Thursday.

The Kiwi Dollar ended the week down by 0.27% to $0.7117.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Prelim industrial production figures for November are due on Monday.

With a number of major markets closed, we can expect some sensitivity to the numbers, with volumes on the lighter side.

Away from the economic calendar, COVID-19 news will continue to influence.

The Japanese Yen ended the week down by 0.13% to ¥103.43 against the U.S Dollar.

Out of China

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

December private sector PMI numbers are due out on Thursday and Friday.

The markets preferred Caixin Manufacturing PMI is due out on Friday, however, when most major markets are closed for New Year’s Day.

The Chinese Yuan ended the week down by 0.03% to CNY6.5418 against the U.S Dollar.

Geo-Politics

U.S Politics

With the U.S on holiday, there shouldn’t be too much to rock the boat in a shortened week ahead.

How the stimulus package proceeds on Capitol Hill will draw interest, however. Following Trump’s refusal to sign the bill, lawmakers refused to accept Trump’s demands last week. The markets are expecting a major package once Biden enters the White House. An interim package is going to be needed, however, to avoid risk aversion and a pickup in demand for the Greenback.

While the package is the main area of focus, President Trump continues to raise eyebrows. He seems unwilling to leave quietly…

Brexit

Boris Johnson delivered what other Prime Ministers failed to deliver last week. In the week ahead, the details of the deal and, more importantly, the parliamentary vote will be the main event.

Reports over the weekend suggest that the Brexit agreement should sail through the House of Commons. With the transition period ending in less than 1-week, there’s no time to make any changes…

The Weekly Wrap – Brexit, COVID-19, and Capitol Hill Provided Direction

The Stats

It was a particularly quiet week on the economic calendar, in the week ending 25th December.

A total of 32 stats were monitored, following 92 stats from the week prior.

Of the 32 stats, 12 came in ahead of forecasts, with 19 economic indicators came up short of forecasts. 1 stat was in line with forecasts in the week.

Looking at the numbers, 10 of the stats reflected an upward trend from previous figures. Of the remaining 22 stats, 20 reflected a deterioration from the previous.

For the Greenback, it was back into the green to mark just a 2nd weekly gain in 6-weeks. The Dollar Spot Index rose by 0.23% to end the week at 90.223. In the week prior, the Dollar had fallen by 1.16% to 89.924.

Out of the U.S

It was a relatively busy week on the economic data front.

Key stats included November personal spending figures, December consumer confidence, core durable goods orders, and weekly jobless claims figures.

Consumer confidence fell from 96.1 to 88.6. Concerns over the sharp increase in new COVID-19 cases weighed on consumer’s assessment of current conditions.

In the week ending 18th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

On the negative, however, was a fall in personal spending. Personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists had forecast a 0.2% decline.

Other stats included inflation, housing sector, and finalized 3rd quarter GDP and consumer sentiment numbers. These stats had a muted impact on the Dollar and the markets, however.

In the equity markets, the S&P500 fell by 0.17%, while the Dow and the NASDAQ ending the week with gains of 0.07% and 0.38% respectively.

Out of the UK

It was a relatively busy week on the economic data front.

Finalized 3rd quarter GDP and business investment figures were in focus on Tuesday.

An upward revision to 3rd quarter GDP figures provided  early temporary relief for the Pound.

The economy expanded by 16%, reversing most of a 19.8% contraction from the 2nd quarter.

Business investment was also revised up from a prelim 8.8%. A 9.4% rise in the 3rd quarter was not enough to reverse a 26.5% slump from the 2nd quarter, however.

While the stats influenced in the early part of the week, Brexit and COVID-19 news remained the key drivers.

A new coronavirus strain led to the reintroduction of lockdown measures, amidst Brexit uncertainty, which weighed on the Pound early in the week.

A Brexit deal late in the week, however, supported a return to $1.35 levels to end the week in the green. The Pound had fallen to $1.33 levels before the recovery.

In the week, the Pound rose by 0.27% to $1.3560. In the week prior, the Pound had rallied by 2.27% to $1.3524.

The FTSE100 ended the week down by 0.41%, following a 0.27% loss from the previous week.

Out of the Eurozone

It was a quiet week on the economic data front.

Key stats included Flash Eurozone Consumer Confidence and German GfK Consumer Climate figures.

For the Eurozone, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From Germany, the GfK Consumer Climate Indicator fell from -6.7 to -7.3 in January. Economists had forecasted a larger decline to -8.8. A fall in income expectations weighed on the headline figure, with the latest spike in new COVID-19 cases and lockdown measures raising uncertainty.

On Wednesday, finalized 3rd quarter GDP figures from Spain had a muted impact on the majors.

Spain’s economy expanded by 16.4% in the 3rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

For the week, the EUR fell by 0.52% to $1.2193. In the week prior, the EUR had risen by 1.20% to $1.2257.

For the European major indexes, it was a mixed week. The CAC40 and DAX30 fell by 0.32% and by 0.10% respectively, while the EuroStoxx600 rose by 0.02%.

For the Loonie

It was a quieter week on the economic data front. Key stats included October GDP figures.

The economy expanded by 0.4% in October, following a 0.8% expansion in September. Economists had forecast 0.3% growth.

In spite of the better than expected numbers, softer growth pinned the Loonie back. Concerns over the continued rise in new COVID-19 cases and new strains added further pressure, with crude oil prices hitting reverse in the week.

In the week ending 11th December, the Loonie fell by 0.60% to C$1.2865. In the week prior, the Loonie had fallen by 0.15% to C$1.2788.

Elsewhere

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

In the week ending 25th December, the Aussie Dollar fell by 0.22% to $0.7605, with the Kiwi Dollar ending the week down by 0.27% to $0.7117.

For the Aussie Dollar

It was a quiet week on the economic calendar.

Key stats included Australia retail sales and private sector credit figures for November.

Retail sales jumped by 7% in November, according to prelim figures, coming in well ahead of a forecasted 0.6% decline. In October, retail sales had risen by 1.4%.

Private sector credit also saw a pickup in November, rising by 0.1%. Credit was down by 1.7% year-on-year.

The impact of the stats on the Aussie was relatively muted, however, as the markets grappled with news of the new coronavirus strains.

For the Kiwi Dollar

It was a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of COVID-19 news through the week, leading to the pullback.

For the Japanese Yen

It was a relatively busy week on the economic calendar. There were no economic data out until Friday, however. The stats had a muted impact on the Yen.

In November, retail sales rose by 0.7%, following an 11.90% jump in October, Economists had forecast a 1.7% rise.

The Japanese Yen fell by 0.13% to ¥103.43 against the U.S Dollar. In the week prior, the Yen had risen by 0.71% to ¥103.30.

Out of China

The PBoC was in action at the start of the week. In line with market expectations, however, the PBoC left loan prime rates unchanged.

A lack of stats and status quo on the monetary policy front left the Yuan in limbo for the week.

In the week ending 25th December, the Chinese Yuan fell by 0.03% to CNY6.5418. In the week prior, the Yuan had fallen by 0.10% to CNY6.5400.

The CSI300 rose by 0.84%, while the Hang Seng ended the week down by 0.42%.

The Week Ahead – COVID-19 Vaccine News, Brexit, and U.S Stimulus in Focus

On the Macro

It’s a quiet and shortened week ahead on the economic calendar, with 31 stats in focus in the week ending 25th December. In the week prior, 92 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front, however, with U.S stats making up the lion’s share of the calendar.

On Tuesday, finalized 3rd quarter GDP and November existing home sales figures are due out.

Barring a marked downward revision to GDP numbers, the stats should have a muted impact on the Dollar.

On Wednesday, November inflation, personal spending, and new home sales figures are due out. Expect inflation and personal spending figures to garner the greatest interest.

Finalized consumer sentiment figures for December are also due out, which should have limited influence.

On Thursday, November core durable goods and durable goods orders are due out along with the weekly jobless claims figures.

In a shortened session, expect the core durable goods orders and jobless claims figures to have the greatest impact on market risk sentiment.

Away from the economic calendar, Capitol Hill remains a key area of interest.

The Dollar Spot Index ended the week down by 1.06% to 90.016.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. Just France and Spain have a shortened session on Thursday, with Germany and Italy closed on both days.

Flash Eurozone consumer confidence figures will draw interest on Monday. An upward movement is expected, with COVID-19 vaccine news to provide support.

On Tuesday, GfK Consumer Climate figures for January are due out, which will likely provide further EUR support. COVID-19 vaccine news should also support a pickup in consumer sentiment at the turn of the year.

Finalized 3rd quarter GDP numbers from Spain, however, should have a muted impact on the EUR on Wednesday.

Away from the economic calendar, COVID-19 and Brexit news will also influence.

The EUR ended the week up by 1.20% to $1.2257.

For the Pound:

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

Finalized 3rd quarter GDP numbers are due out on Tuesday, along with current account and finalized business investment figures.

Barring marked revisions from prelim estimates, the markets will likely brush aside the stats in the week.

Away from the economic calendar, updates on Brexit and COVID-19 will influence before the holidays.

The Pound ended the week up by 2.27% to $1.3524.

For the Loonie:

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

On Wednesday, October GDP figures are due out ahead of November building permit numbers on Thursday.

Expect the GDP figures to garner the greatest interest.

It’s a shortened week for the Loonie, with the Canadian market on a shortened day on Thursday and closed on Friday.

Away from the economic calendar, COVID-19 vaccine news and updates from Capitol Hill will also influence.

The Loonie ended the week down by 0.15% to C$1.2788 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

Retail sales figures for November are due out on Tuesday. Expect plenty of influence from the retail sales figures in the early part of the week.

COVID-19 vaccine news updates and sentiment towards the economic outlook will be the key driver in a shortened week.

Late last week, news of a COVID-19 cluster in Sydney weighed on the Aussie Dollar. Expect further updates from the weekend to also influence.

The Aussie Dollar ended the week up by 1.18% to $0.7622.

For the Kiwi Dollar:

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

There are no material stats due out in a shortened week to provide the Kiwi Dollar with direction.

The lack of stats will leave the Kiwi Dollar in the hands of COVID-19 news updates and geopolitics.

It’s also a shortened, with the Kiwi markets on an early close on Thursday and closed on Friday.

The Kiwi Dollar ended the week up by 0.73% to $0.7136.

For the Japanese Yen:

It is a relatively busy week on the economic calendar.

December inflation figures are due out along with November retail sales and employment figures on Friday.

With other major markets closed on the day, lower volumes will likely make the Yen more sensitive to the numbers.

Expect November retail sales figures to have the greatest impact.

Away from the economic calendar, COVID-19 news updates will remain a key driver.

The Japanese Yen ended the week up by 0.71% to ¥103.30 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front, with no economic data due out to influence risk sentiment.

The PBoC is in action at the start of the week, however, though the markets are expecting Loan Prime Rates to remain unchanged.

The Chinese Yuan ended the week up by 0.10% to CNY6.5400 against the U.S Dollar.

Geo-Politics

U.S Politics

With the holidays rapidly approaching, government funding and the stimulus package remain high on the agenda.

Expect plenty of market sensitivity to political updates from Capitol Hill. There was a lack of progress on Saturday, which could test risk appetite should lawmakers fail to make inroads on Sunday.

Brexit

There are less than 2-weeks remaining for Britain and the EU to come up with an agreement.

While the transition period ends on 31st December, however, talks would likely continue if an agreement isn’t reached. It may be of little consolation for the Pound in the week ahead, however.

Much will depend on the messaging between now and the holidays. Until now, the EU has looked to place a more positive spin on talks. A similar sentiment from the British government should, therefore, be Pound positive.

Going into today, there was nothing positive to suggest a deal before the holidays…

The Weekly Wrap – COVID-19 Vaccine, Brexit, Stimulus Talks, and Stats Were in Focus

The Stats

It was a particularly busy week on the economic calendar, in the week ending 18th December.

A total of 92 stats were monitored, following 52 stats from the week prior.

Of the 92 stats, 46 came in ahead of forecasts, with 35 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 48 of the stats reflected an upward trend from previous figures. Of the remaining 44 stats, 39 reflected a deterioration from previous.

For the Greenback, it was back into the red, to mark the 4th week in the red from the last 5-weeks. The Dollar Spot Index slid by 1.16% to end the week at 89.924. In the week prior, the Dollar had risen by 0.31% to 90.980.

Progress towards a COVID-19 stimulus package on Capitol Hill and a dovish FED contributed to the Dollar’s demise.

Upbeat COVID-19 vaccine news also supported riskier assets that weighed on the Dollar.

Out of the U.S

It was a busy week on the economic data front.

At the start of the week, industrial production figures showed slower output in November.

Retail sales figures for November, also disappointed, with core retail sales and retail sales on the slide. Core retail sales fell by 0.9%, with retail sales falling by 1.1%.

Adding to the negative sentiment ahead of the FED were disappointing service sector PMI numbers.

In December, the service sector PMI fell from 58.4 to 55.3, reflecting the effects of the spike in new COVID-19 cases.

On Thursday, weekly jobless claims and Philly FED Manufacturing figures wrapped up a busy week.

Yet another red flag on the labor market front, with initial jobless claims jumping to 885k in the week ending 11th December.

Philly FED manufacturing numbers also disappointed, with the Index falling from 26.3 to 11.1.

On Wednesday, the FED added to the negative sentiment towards the Dollar, delivering a dovish tone.

While holding monetary policy unchanged and revising up growth forecasts, the promise of holding bond purchases and interest rates at current levels weighed.

In the equity markets, the S&P500 rose by 1.25%, with the Dow and the NASDAQ ending the week with gains of 0.44% and 3.05% respectively.

Out of the UK

It was also a busy week on the economic data front.

Employment figures on Tuesday disappointed, with claimant counts and the unemployment rate on the rise.

On Wednesday, the focus shifted to inflation and private sector PMI numbers.

The stats were skewed to the negative once more. Inflationary pressures eased in November, with the services sector contracting in December.

With the stats skewed to the negative, the focus then shifted to the BoE on Thursday.

In line with market expectations, the BoE left monetary policy unchanged, citing economic uncertainties.

At the end of the week, November retail sales figures wrapped things up. While the numbers were positive relative to forecasts, the figures reflected the reintroduction of lockdown measures.

Month-on-month, core retail sales fell by 2.6%, with retail sales tumbling by 3.8%.

While the stats were skewed to the negative, agreement to continue Brexit negotiations drove demand for the Pound.

In the week, the Pound rallied by 2.27% to $1.3524. In the week prior, the Pound had fallen by 1.61% to $1.3224.

The FTSE100 ended the week down by 0.27%, following a 0.05% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Prelim private sector PMI numbers for December were the main area of focus in the week.

Better than expected PMIs from France, Germany, and the Eurozone provided EUR support.

In December, Germany’s manufacturing PMI hit a 34-month high of 58.6. Coupled with a return to expansion in France, the Eurozone’s manufacturing PMI rose from 53.8 to 55.5.

Service sector activity remained a drag, however. In spite of a slower rate of contraction, the Eurozone’s composite came in at 49.8, up from 45.3 in November.

At the end of the week, Germany’s IFO Business Climate Index figures also drew attention.

In December, the Business Climate Index rose from 90.9 to 92.1, with the Business Expectations sub-Index up from 91.8 to 92.8. The Current Assessment sub-Index also got a boost, rising from 90.0 to 91.3.

Economic resilience and less skepticism towards the next 6-months supported the pickup in December. The upside came in spite of certain sectors being impacted by fresh lockdown measures.

With the stats skewed to the positive, hopes of vaccine approvals by the EMA next week added support for the EUR and the European majors.

For the week, the EUR rose by 1.20% to $1.2257. In the week prior, the EUR had fallen by 0.07% to $1.2112.

For the European major indexes, it was a bullish week. The DAX30 led the way, rallying by 3.94%, with the CAC40 and the EuroStoxx600 rising by 0.37% and by 1.48% respectively.

For the Loonie

It was a busier week on the economic data front. Key stats included November inflation and October retail sales figures.

A pickup in inflationary pressures in November delivered support mid-week. The annual rate of core inflation picked up from 1.0% to 1.5%.

At the end of the week, retail sales and core retail sales were skewed to the negative, however. Core retail sales were flat in October, after a 1% rise in September. Retail sales rose by 0.4%, easing from a 1.1% rise in September.

In the week ending 11th December, the Loonie fell by 0.15% to C$1.2788. In the week prior, the Loonie had risen by 0.12% to C$1.2769.

Elsewhere

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

In the week ending 18th December, the Aussie Dollar rose by 1.18% to $0.7622, with the Kiwi Dollar ending the week up by 0.73% to $0.7136.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats included November employment figures. Another pickup in employment led to a fall in the unemployment rate from 7.0% to 6.8%.

The fall in unemployment came in spite of a rise in the participation rate, another boost for the Aussie Dollar.

On the monetary policy front, the RBA meeting minutes had a relatively muted impact on the Aussie Dollar. There were no major surprises, with the RBA likely to leave cash rates unchanged for at least 3-years.

Progress towards a global COVID-19 vaccine also delivered support for riskier assets.

For the Kiwi Dollar

It was a busier week on the economic calendar.

Key stats included consumer and business confidence, trade, and GDP figures.

The stats were skewed to the positive supporting the Kiwi Dollar’s return to $0.71 levels.

In the 4th quarter, consumer confidence saw a marked increase, with business confidence turning positive in December.

GDP figures also impressed, with the economy expanding by 14% in the 3rd quarter. In the 2nd quarter, the economy had contracted by 11%.

While a widening in the trade surplus was also positive, a slide in imports contributed to the widening. COVID-19 vaccinations and a return to normal at NZ ports should support a rebound in imports, however.

For the Japanese Yen

It was a particularly busy week on the economic calendar.

At the start of the week, Tankan survey figures were in focus and skewed to the positive. Private sector conditions improved in the 4th quarter.

The Large Manufacturers Index rose from -27 to -10, with the Large Non-Manufacturers Index rising from -12 to -5.

Trade data and private sector PMI figures disappointed mid-week, however.

In November, the trade surplus narrowed from ¥871.7bn to ¥366.8bn, with exports sliding by 4.2%.

While the service and manufacturing PMIs saw a slight rise in December, both sectors continued to contract.

Wrapping things up at the end of the week were inflation figures that were also negative. Deflationary pressures picked up in November, with core consumer prices falling by 0.9%. In October, core consumer prices had fallen by 0.7%.

On the monetary policy front, the BoJ left policy unchanged at the end of the week, while extending COVID-19 support measures by an additional 6-months.

The Japanese Yen rose by 0.71% to ¥103.3 against the U.S Dollar. In the week prior, the Yen had risen by 0.12% to ¥104.04.

Out of China

Industrial production, retail sales, and unemployment figures for November were in focus early in the week.

The stats were skewed to the positive, supporting riskier assets.

Year-on-year, industrial production rose by 7.0%, following a 6.9% increase in October. Retail sales increased by 5%, following a 4.3% rise in October, supported by improving employment conditions.

The unemployment rate fell from 5.3% to 5.2% in the month.

In the week ending 18th December, the Chinese Yuan fell by 0.10% to CNY6.5400. In the week prior, the Yuan had fallen by 0.23% to CNY6.5463.

The CSI300 rose by 2.26%, while the Hang Seng ended the week down by 0.03%.