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

On the Macro

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

For the Dollar:

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

Expect any increase in claims to test market risk appetite.

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

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

For the EUR:

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

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

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

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

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

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

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

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

For the Pound:

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

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

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

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

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

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

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

For the Loonie:

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

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

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

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

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

For the Kiwi Dollar:

It’s a quiet week ahead.

1st quarter inflation figures are due out on Wednesday.

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

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

For the Japanese Yen:

It is also a relatively quiet week ahead.

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

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

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

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

Out of China

It’s a particularly quiet week ahead.

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

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

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

Geo-Politics

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

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

Corporate Earnings

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

From the U.S:

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

From the EU:

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

The Weekly Wrap – Economic Data, COVID-19 Vaccine News, and Geopolitics Were in Focus

The Stats

It was a busy week on the economic calendar, in the week ending 16th April.

A total of 72 stats were monitored, following 36 stats from the week prior.

Of the 72 stats, 38 came in ahead forecasts, with 21 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 36 of the stats reflected an upward trend from previous figures. Of the remaining 36 stats, 23 reflected a deterioration from previous.

For the Greenback, it was a second consecutive weekly loss. In the week ending 16th April, the Dollar Spot Index fell by 0.66% to 91.556. In the previous week, the Dollar had fallen by 0.90% to 92.182.

The Dollar remained under pressure following the dovish FOMC meeting minutes from the week prior. This was in spite of a pickup in inflationary pressures, with FED Chair Powell’s reassurances resonating across the markets.

Out of the U.S

It was a busier week on the economic data front.

Key stats included inflation, retail sales, and jobless claims figures, which were market risk positive.

Early in the week, a pick in inflationary pressure failed to spook the markets. In spite of the annual core rate of inflation accelerating to 1.6%, the FED’s assurance of unwavering support was key.

In the week ending 9th April, initial jobless claims decreased from 769k to 576k. Economists had forecast a decline to 700k.

In the month of March, retail sales jumped by 9.8%, reversing a 2.7% decline from February. Core retail sales rose by 8.4%, reversing a 2.5% decline from February.

Economists had forecast retail sales to rise by 5.9% and for core retail sales to increase by 5.0%.

From the manufacturing sector, the Philly FED Manufacturing PMI fell from 51.8 to 50.2 in April. Economists had forecast a sharper decline to 42.0, however.

At the end of the week, stats were also skewed to the positive. The Michigan Consumer Sentiment Index rose from 84.9 to 86.5 in April, according to prelim figures.

In the equity markets, the NASDAQ rose by 1.09%, with the Dow and the S&P500 gaining 1.18% and 1.37% respectively.

Corporate earnings supported the indexes in the week.

Out of the UK

It was a relatively busy week.

Industrial and manufacturing production, trade, and GDP figures were in focus in the week.

It was a mixed set of numbers for the Pound.

While industrial and manufacturing production partially recovered from declines in January, trade data disappointed. Manufacturing production increased by 1.3% in February, after having fallen by 2.3% in January.

The UK’s trade deficit widened from £12.59bn to £16.44bn in February. While exports to the EU picked up, it was with the rest of the world that led to the sharp widening.

In February, the UK’s trade deficit with non-EU countries widened from £4.46bn to £10.73bn.

GDP numbers also disappointed. The economy grew by just 0.4% in February, partially recovering from a 2.2% contraction in January.

In the week, the Pound rose by 0.53% to end the week at $1.3779. In the week prior, the Pound had fallen by 0.90% to $1.3707.

The FTSE100 ended the week up by 1.50%, following a 2.65% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Key stats included Eurozone retail sales, industrial production, and trade data along with economic sentiment figures for Germany and the Eurozone.

It was a mixed set of numbers for the EUR.

Retail sales rose by more than expected in February, while industrial production hit reverse.

Economic sentiment figures for Germany and the Eurozone disappointed Sentiment waned in both Germany and the Eurozone.

For Germany, the ZEW Economic Sentiment Index fell from 76.6 to 70.7, while the Eurozone’s declined from 74.0 to 66.3.

At the end of the week, the Eurozone’s trade surplus widened from €11.0bn to €17.7bn, delivering a positive spin at the end of the week.

Throughout the week, inflation figures for member states and the Eurozone were aligned with prelim figures. The pickup in inflationary pressures delivered EUR support in the week.

For the week, the EUR rose by 0.66% to $1.1977. In the week prior, the EUR had risen by 1.19% to $1.1899.

The CAC40 rallied by 1.91%, with the DAX30 and EuroStoxx600 ending the week with gains of 1.48% and 1.20% respectively.

For the Loonie

It was a quieter week.

Manufacturing sales and wholesale sales figures were in focus in the week.

The stats had a muted impact on the Loonie, however, with market sentiment towards crude oil demand providing support. WTI and Brent ended the week up by 6.42% and by 5.90% respectively.

From the Bank of Canada, the BoC’s business outlook survey reflected a pickup in optimism amongst businesses in Q1. The timing of the survey, however, muted the impact as a pickup in new COVID-19 cases and fresh containment measures were introduced after the survey dates.

In the week ending 16th April, the Loonie rose by 0.22% to C$1.2503. In the week prior, the Loonie had risen by 0.38% to C$1.2530.

Elsewhere

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

In the week ending 16th April, the Aussie Dollar rose by 1.46% to $0.7734, with the Kiwi Dollar ending the week up by 1.55% to $0.7142.

For the Aussie Dollar

It was a relatively busy week.

Key stats included business and consumer confidence and employment figures.

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

Business confidence softened modestly in March, while consumer sentiment improved in April.

The numbers were Aussie Dollar positive ahead of the all-important employment figures late in the week.

In March, Australia’s unemployment rate fell from 5.8% to 5.6% in spite of a rise in the participation rate. Another marked increase in employment led to the fall in the unemployment rate. It was noteworthy, however, that full employment fell in the month.

For the Kiwi Dollar

It was also a relatively busy week.

Early in the week, business confidence and electronic card retail sales were in focus.

The stats were Kiwi Dollar positive. Business confidence improved in the 1st quarter, with retail sales on the rise after a slide in February.

At the end of the week, the business PMI jumped from 53.4 to an all-time high 63.6 in March. A sharp increase in new orders and production drove the PMI to its all-time high.

On the monetary policy front, the RBNZ was also in action. While holding rates steady, the rate statement tested the Kiwi Dollar mid-week. Talk of a willingness to cut the cash rate further amidst a slowdown in the recovery pegged the Kiwi back.

For the Japanese Yen

It was a quiet week.

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

The lack of stats left core machinery orders in focus mid-week, which took an unexpected slide in February.

While the numbers drew interest, concerns over a fresh spike in new COVID-19 cases, geopolitics, and a weaker Greenback delivered Yen support.

The Japanese Yen rose by 0.79% to ¥108.80 against the U.S Dollar. In the week prior, the Yen had risen by 0.92% to ¥109.67.

Out of China

It was a busy week on the data front.

In the first half of the week trade data impressed, with exports surging by 49.0% and imports by 38.1%.

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

In the 1st quarter, the China economy expanded by 0.6%, quarter-on-quarter, following 2.6% growth in the 4th quarter. Economists had forecasted growth of 1.5%.

Year-on-year, the economy expanded by 18.3%, versus a forecasted growth of 19.0%. In the 4th quarter, the economy had expanded by 6.5% year-on-year.

Industrial production was up by 14.1% in March, year-on-year, falling short of a forecasted 17.2% rise. In February, industrial production had risen by 35.1%.

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

Fixed asset investment rose by 25.6% year-on-year, coming in ahead of a forecasted 25.0% rise. In February, fixed asset investment had increased by 35.0%.

Retail sales increased by 34.2%, which was better than a forecasted 28%. In February, retail sales had risen by 33.8% year-on-year.

Finally, the unemployment rate fell from 5.5% to 5.3% in March. Economists had forecast for unemployment to hold steady at the end of the quarter.

In the week ending 16th April, the Chinese Yuan rose by 0.49% to CNY6.5206. In the week prior, the Yuan had risen by 0.22% to CNY6.5526.

The CSI300 fell by 1.37%, while the Hang Seng ended the week up by 0.94%.

The Dollar May be at an Inflection Point

The dollar’s inability to gain after the much stronger than expected March employment data may have encouraged a bout of profit-taking. Next week offers a test on the hypothesis that the dollar-bullish divergence meme has been fully discounted. After a brief hiatus, US coupon sales will return ($110 bln), and a string of high-frequency data is likely to confirm an acceleration of prices and activity.

On balance, we expect the US dollar and long-term interest rates to rise next week. US rates fell, with the 10-year yield falling to two-week lows near 1.60%. This means that there is no concession to next week’s supply that begins with a $58 bln sale of three-year notes on Monday. The US will be raising $110 bln in coupon sales, while the data will likely show a jump in prices (base effect and more).

There will also be a surge in real sector data, partly reflecting the recovery from February’s weather-induced weakness and the new stimulus. Meanwhile, new restrictions in Japan and Europe mean that divergence with the US may extend deep into Q2. In fact, if the dollar does not trade higher next week, the bears, who seemed to go into hibernation in Q1, will re-emerge on ideas that investors are moving beyond its focus on the stimulus-driven US recovery and yawning divergence.

Dollar Index

Last week’s pullback met the (38.2%) retracement target of the leg up since the late February low (~89.70) found near 92.00. A convincing break could signal a return to the 91.00-91.30 band. A move now above the 92.50 area would lift the tone, with an initial target in the 92.85-93.00 band, and, perhaps, to the five-month high set at the end of last month closer to 93.50. The MACD and Slow Stochastic point lower, while the RSI is turning higher. The 200-day moving average, which the Dollar Index begins the new week a bit above, is found around9 2.35. The recent decline has seen the five-day average slip below the 20-day moving average for the first time in a little more than a month.

Euro

The outside up day on April 5, which seemed to complete a small head and shoulders pattern with the close above $1.18. It set the technical tone for the rest of the week, and the euro met the minimum objective of a bit more than $1.19. However, disappointing European industrial production figures and a jump in US rates (before the US PPI jump that was twice the median forecast in Bloomberg’s survey) stalled the euro’s recovery.

A little shelf has emerged near $1.1860. A bit lower is the (38.2%) retracement of the bounce since the end of March and the 20-day moving average (~$1.1840). A break of the $1.1790-$1.1800 area would signal a retest on $1.17. Some think a new range may be emerging, roughly $1.17-$1.20.

Japanese Yen

The 15 bp decline in the US 10-year yields from its March 30 peak above 1.77% seemed to drag the dollar lower against the yen. Speculators in the futures market had jumped with both feet into short yen positions. The gross short yen position by non-commercials jumped from 13.3k contracts, a multi-year low, in the first half of January to 84.7k contracts as of April 6. Last week was only the third (weekly) decline in the dollar since the end of January.

The dollar peaked in the last session of Q1, just shy of JPY111.00. It hit JPY109 on April 8 before jumping back to almost JPY110 ahead of the weekend as higher US (and China) inflation lifted yields. The JPY110.20 area is the next retracement (61.8%) of the dollar’s pullback. It takes more than a pre-weekend dollar bounce to turn the momentum indicators. A break of last week’s low could spur a move toward the JPY108.30-JPY108.40 area.

British Pound

Sterling fell for the fifth week of the past seven. It flirted with the lows from late March, near $1.3670 ahead of the weekend, before recovering back to almost $1.3750. The MACD remains in its trough, while the Slow Stochastic is turning lower from the mid-range. The five-day moving average has held below the 20-day since early March. Cable also appeared influenced by the dramatic recovery of the euro against sterling. The euro fell to its lows level since March 2020 against sterling at the start of last week (~GBP0.8470).

It recovered smartly to almost GBP0.8700 before the weekend, which corresponds to the (38.2%) retracement of the leg lower that began on January 6 near GBP0.9085, where it met strong selling pressure. It was the biggest euro advance against sterling in about seven months. While we cast a jaundiced eye over many seasonality claims in the foreign exchange market, we note April tends to be a good month for sterling. In the past 20 years, sterling has risen in 17 Aprils. However, May is cruel and sterling has fallen in 16 of the past 20 years in May.

Canadian Dollar

The US snapped a three-week advance against the Canadian dollar that lifted it from a three-year low (~CAD1.2365) to around CAD1.2650 at the end of March. That late March high was retested last week. A robust Canadian jobs report blew away expectations and gave the Loonie a bid. The greenback settled on its lows, and a break of CAD1.25 will open up the downside.

The MACD is trying to turn lower, while the Slow Stochastic already has rolled over. The Bank of Canada meets on April 21. Even though Ontario has reintroduced social restrictions, and the excess fatalities in Canada may rival the US on a per capita basis, the central bank will likely be increasingly confident of a strong economic rebound.

Australian Dollar

The Aussie peaked in late February at a little over $0.8000. It fell to around $0.7600 and has spent most of the past three weeks confined to around a half of a cent range around it. While there appears to be little momentum, the MACD is trying to turn up from overextended territory, and the Slow Stochastic is already trending higher.

Upticks last week were capped by the 20-day moving average, which begins the new week near $0.7660. Australia lost around 350k full-time positions from March through June last year. In the eight months since, it has recouped them all, plus. On the other hand, the unemployment rate was at 5.8% in February, up from 5.1% at the end of 2019. The March figures are the highlight of next week’s data.

Mexican Peso

The dollar eased by around 0.7% against the peso last week. It was the second consecutive weekly decline and the fourth in the past five weeks. This largely mirrors the performance of the JP Morgan Emerging Market Currency Index. Mexico reported a jump in inflation (CPI 4.67%, up from 3.76% in February, and the bi-weekly readings warn it may not have peaked. Mexico also reported a 0.4% rise in industrial output (economists had projected a decline).

A recovery in auto production and sales seems to be critical and linked to the strengthening US economy. The greenback peaked in early March near MXN21.6350 and last week recorded a low around MXN20.0650, its lowest level in almost two months. The move is stretched. The MACD is at its lows for the year, while the Slow Stochastic is poised to turn higher from oversold terrain. The MXN20.40-MXN20.50 area offers the first hurdle for a dollar bounce.

Chinese Yuan

The yuan rose for the first time against the dollar in seven weeks. It has completely unwound its earlier gains and is now off about 0.4% for the year. More trackers of flows into different funds are seeing outflows from Chinese bonds. The yuan’s weakness seems to be fundamentally driven, and the PBOC is not leaning hard against it. Last week, the dollar traded inside the previous week’s range (~CNY6.54-CNY6.58).

The offshore yuan is a little softer than the onshore yuan, which is understood as offering insight into the direction of the underlying pressures. Beijing is expected to report lending figures, trade, investment, retail sales, and industrial production figures for March, culminating in the first look at Q1 GDP. The economy has lost some of its mojo, and the median forecast in Bloomberg’s survey projects that growth nearly halved from the Q4 20 pace (2.6%) to around 1.4%.

This article was written by Marc Chandler, MarctoMarket.

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

On the Macro

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

For the Dollar:

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

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

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

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

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

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

For the EUR:

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

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

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

Mid-week, industrial production figures for the Eurozone.

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

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

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

For the Pound:

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

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

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

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

For the Loonie:

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

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

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s a busier week ahead.

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

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

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

Improving labor market conditions will also be a must.

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

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

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

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

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

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

For the Japanese Yen:

It is a quiet week ahead.

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

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

Out of China

It’s a relatively busy week ahead.

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

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

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

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

Geo-Politics and COVID-19

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

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

Corporate Earnings

Earning season also kicks off in the week ahead.

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

The Weekly Wrap – A Dovish FED Pegs Back the Greenback

The Stats

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

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

Of the 36 stats, 23 came in ahead forecasts, with 11 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 24 of the stats reflected an upward trend from previous figures. Of the remaining 12 stats, 11 reflected a deterioration from previous.

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

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

Out of the U.S

It was a quieter week on the economic data front.

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

It was a mixed set of numbers for the Greenback.

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

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

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

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

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

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

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

Out of the UK

It was a quiet week on the economic data front.

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

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

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

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

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

Out of the Eurozone

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

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

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

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

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

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

Industrial production and trade data disappointed, however.

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

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

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

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

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

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

For the Loonie

It was a busier week.

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

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

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

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

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

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

Elsewhere

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

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

For the Aussie Dollar

It was a particularly quiet week.

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

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

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

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

For the Kiwi Dollar

It was also a particularly quiet week.

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

For the Japanese Yen

It was a relatively quiet week.

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

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

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

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

Out of China

It was a relatively quiet week on the data front.

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

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

The Services PMI rose from 51.5 to 54.3.

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

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

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

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

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

China’s March Forex Reserves Fall to $3.17 Trillion

The country’s foreign exchange reserves – the world’s largest – fell $34.97 billion to $3.17 trillion last month, compared with the $3.19 trillion expected by a Reuters poll of analysts and $3.205 trillion in February.

Foreign inflows into Chinese stocks and bonds have been strong as China gallops ahead of other major economies in its recovery from the coronavirus pandemic.

The yuan fell 1.28% against the dollar in March, while the dollar rose 2.52% in March against a basket of other major currencies.

China held 62.64 million fine troy ounces of gold at the end of March, unchanged from the end-February.

The value of China’s gold reserves fell to $105.93 billion at the end of March from $109.18 billion at the end-February.

(Reporting by Judy Hua and Kevin Yao; Editing by Andrew Heavens)

The Weekly Wrap – Impressive Economic Data and Market Optimism Delivers Another Dollar Gain

The Stats

It was a slightly busier week on the economic calendar, in the week ending 2nd April.

A total of 60 stats were monitored, following 56 stats from the week prior.

Of the 60 stats, 38 came in ahead forecasts, with 16 economic indicators coming up short of forecasts. There were 6 stats that were 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 20 stats, 18 reflected a deterioration from previous.

For the Greenback, it was a 3rd consecutive week in the green. In the week ending 2nd April, the Dollar Spot Index rose by 0.28% to 93.022. In the previous week, the Dollar had rallied by 0.92% to 92.766.

The upside for the Dollar came amidst rising optimism over the U.S economic outlook. Improving economic data and U.S government spending plans supported the positive outlook.

Out of the U.S

It was a quieter week on the economic data front. While quieter, there were some key stats for the markets to consider.

In the 1st half of the week, consumer confidence and ADP nonfarm employment change figures delivered.

The CB consumer confidence index jumped from 90.4 to 109.7 in March.

Justifying improving consumer sentiment was a 517k rise in nonfarm employment, according to ADP figures.

In the 2nd half of the week, manufacturing PMI and labor market numbers were in focus.

The market’s preferred ISM Manufacturing PMI increased from 60.8 to 64.7 in March,

On Thursday, jobless claims disappointed, however, rising from 658k to 719k in the week ending 26th March.

Wrapping things up at the end of the week were nonfarm payroll figures and the U.S unemployment rate.

In March, nonfarm payrolls surged by 916k, leading to a further decline in the unemployment rate from 6.2% to 6.0%. The fall in the unemployment rate came in spite of a rise in the participation rate from 61.4% to 61.5%.

In the equity markets, the NASDAQ and the S&P500 rose by 2.60% and by 1.14% respectively, with the Dow gaining 0.24%.

Out of the UK

It was a quiet week on the economic data front.

Finalized 4th quarter GDP and finalized manufacturing PMI numbers for March were in focus.

According to finalized figures, the UK economy expanded by 1.3% in the 4th quarter. In the 3rd quarter, the economy had expanded by 16%.

Year-on-year, the UK economy contracted by 7.3%, which was up from a prelim 7.8% contraction. In the 3rd quarter, the economy had contracted by 8.5%.

Also positive was an upward revision to the manufacturing PMI. In March, the PMI increased from 55.1 to 58.9, which was up from a prelim 57.9.

In the week, the Pound rose by 0.31% to end the week at $1.3832. The Pound had fallen by 0.60% to $1.3789 in the week prior.

The FTSE100 ended the week down by 0.05%, partially reversing a 0.48% gain from the previous week.

Out of the Eurozone

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

Consumer spending, unemployment, manufacturing PMIs, and inflation figures were in focus.

It was a mixed set of numbers for the EUR, though the stats were skewed to the positive in a shortened week.

While consumer spending fell in France, retail sales was on the rise in Germany.

Germany’s unemployment rate held steady following a further decline in the number of unemployed. This was also EUR positive.

Providing much-needed support, however, was better than expected manufacturing PMI numbers.

With Italy and Spain seeing manufacturing sector activity pickup at a marked pace, the Eurozone’s PMI hit an all-time high 62.5.

Germany’s PMI also hit an all-time high 66.6 in March.

Inflation figures were mixed, however.

While the Eurozone’s annual core rate of inflation softened in March, the Eurozone’s annual rate of inflation accelerated at the end of the 1st quarter.

A marked pickup in inflationary pressures across member states was aligned with market expectations.

While the stats were skewed to the positive, uncertainty over the economic outlook weighed. A lack of vaccine supply and fresh spike in new COVID-19 cases weighed on the EUR in the week.

For the week, the EUR fell by 0.30% to $1.1759. In the week prior, the EUR had fallen by 0.92% to $1.1794.

The DAX30 rallied by 2.43%, with the CAC40 and EuroStoxx600 ended the week with gains of 1.91% and 1.23% respectively.

For the Loonie

It was another quiet week.

January GDP and February RMPI numbers were in focus mid-week.

The stats were skewed to the positive. In January, the Canadian economy expanded by 0.7% after having expanded by just 0.1% in December.

Also Loonie positive was a 6.6% jump in the RMPI, month-on-month. In January, the RMPI had risen by 5.7%.

While the stats were Loonie positive, it was another week in favor of the Greenback. A marginal rise in crude oil prices also left the Loonie flat.

In the week ending 2nd April, the Loonie slipped by 0.01% to C$1.2578. In the week prior, the Loonie had fallen by 0.62% to C$1.2577.

Elsewhere

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

In the week ending 2nd April, the Aussie Dollar fell by 0.35% to $0.7610, while the Kiwi Dollar ending the week up by 0.46% to $0.7032.

For the Aussie Dollar

It was a relatively busy week.

Mid-week, private sector credit and building approvals were in focus.

A 21.6% surge in building approvals reversed a 19.4% tumble in the month prior.

Private sector credit continued to disappoint, however, rising by just 0.2% in February.

Manufacturing, retail sales, and trade data wrapped things up on Thursday.

The stats were skewed to the negative.

While manufacturing sector activity picked up in March, retail sales fell in February.

Australia’s trade surplus also narrowed in February, pressuring the Aussie Dollar ahead of Friday’s market close.

A 0.57% gain on Friday cut the deficit for the week…

For the Kiwi Dollar

It was a relatively quiet week.

Building consents and business confidence figures were in focus in the week.

The stats were skewed to the negative. Building consents tumbled by 18.2%, with business confidence also weakening.

In March, the ANZ Business Confidence Index fell from +7 to -4.1.

The stats had pegged the Kiwi Dollar back before a 2nd half of the week recovery to $0.70 levels.

For the Japanese Yen

It was a busy week.

Retail sales and industrial production figures drew attention in the 1st half of the week.

The stats were skewed to the negative. Retail sales fell by a further 1.5% in February, following a 2.4% slide in January.

Industrial production partially reversed a 4.3% increase from January, falling by 2.1% in February.

Later in the week, finalized Manufacturing PMI and 1st quarter Tankan survey figures were in focus.

The stats were Yen positive, with the Tankan Large Manufacturers Index rising from -10 to +5 in the quarter.

In the 1st quarter, the Large Non-Manufacturing Index increased from -5 to -1. According to the surveys, the outlook also improved, with the Big Manufacturing Outlook Index climbing from -8 to +4.

In March, Japan’s Manufacturing PMI rose from 51.4 to 52.7, revised up from a prelim 52.0. The rise in the PMI signaled the strongest improvement in the health of the sector since Oct-2018.

The Japanese Yen declined by 0.96% to ¥110.69 against the U.S Dollar. In the week prior, the Yen had fallen by 0.70% to ¥109.64.

Out of China

It was a relatively quiet week on the data front.

Private sector PMIs were in focus in the 2nd half of the week.

The NBS Manufacturing PMI increased from 50.6 to 51.9, with the Non-Manufacturing PMI rising from 51.4 to 56.3.

By contrast, however, the market’s preferred Caixin Manufacturing PIM slipped from 51.4 to an 11-month low 50.6.

Despite of the decline, optimism hit levels not seen in 7-years, limiting the impact on the markets.

In the week ending 2nd April, the Chinese Yuan fell by 0.40% to CNY6.5670. In the week prior, the Yuan had fallen by 0.49% to CNY6.5411.

The CSI300 rose by 2.45%, with the Hang Seng ending the week up by 2.13%.

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

On the Macro

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

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

For the Dollar:

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

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

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

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

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

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

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

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

For the EUR:

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

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

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

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

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

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

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

For the Pound:

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

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

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

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

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

For the Loonie:

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

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s a busy week.

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

Expect private sector credit figures to have the greatest impact.

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

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

For the Kiwi Dollar:

It’s a quiet week ahead.

Building consents for February are due out on Tuesday.

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

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

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

For the Japanese Yen:

It is a busy week ahead.

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

Expect industrial production figures to draw greater interest.

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

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

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

Out of China

It’s a relatively quiet week ahead.

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

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

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

Geo-Politics

U.S Politics

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

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

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

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

EU Politics

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

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

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

The Stats

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

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

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

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

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

Out of the U.S

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

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

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

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

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

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

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

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

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

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

Out of the UK

It was a busy week on the economic data front.

Employment figures delivered mixed results early in the week.

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

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

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

While inflation figures disappointed, private sector PMIs impressed.

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

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

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

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

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

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

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

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

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

Out of the Eurozone

It was a busy week on the economic data front.

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

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

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

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

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

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

German Consumer and Business Confidence

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

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

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

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

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

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

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

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

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

For the Loonie

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

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

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

Elsewhere

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

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

For the Aussie Dollar

It was another quiet week.

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

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

For the Kiwi Dollar

It was a relatively quiet week.

February trade figures were in focus mid-week.

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

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

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

For the Japanese Yen

It was a relatively busy week.

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

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

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

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

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

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

Out of China

It was a quiet week on the data front.

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

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

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

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

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

China to Increase High-Quality Imports as Economy Recovers, Vice Premier Says

The world’s No.2 economy, will strengthen macro policy coordination with other countries, Han told the China Development Forum, a high-level business gathering hosted by the Development Research Centre of the State Council.

“Since the start of this year, China’s economic operations have continued a steady recovery trend,” Han said.

“We will adjust and improve import tax policies, increase imports of high-quality products and imports of services,” he said without giving further details.

China’s economy expanded 2.3% last year, making it the only major economy to report growth, although the growth was its weakest in 44 years.

Its economy is widely predicted to expand by more than 8% in 2021, led by an expected double-digit rise in the first quarter, but analysts and officials say the recovery remains uneven.

Also at the forum, He Lifeng, head of the National Development and Reform Commission, the state planner, said the foundation of China’s economic recovery was not solid, citing global economic uncertainties and domestic economic imbalances.

He said China would continue to provide financial relief for some companies and avoid an abrupt change in policy.

The central bank is trying to cool credit growth to help contain debt risks, but is treading warily to avoid hurting the economic recovery, which remains uneven as consumption lags and small firms struggle, policy insiders said.

(Reporting by Kevin Yao, Yilei Sun and Muyu Xu in Beijing; Editing by Frances Kerry, Catherine Evans and Barbara Lewis)

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

On the Macro

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

For the Dollar:

It’s a busy week ahead.

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

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

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

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

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

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

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

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

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

For the EUR:

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

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

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

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

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

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

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

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

For the Pound:

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

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

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

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

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

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

For the Loonie:

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week.

There are no material stats to provide the Aussie Dollar with direction. The lack of stats will leave the Aussie Dollar in the hands of private sector PMIs from Europe and the U.S.

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

For the Kiwi Dollar:

It’s yet another quiet week ahead.

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

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

Expect disappointing numbers to test Kiwi Dollar support.

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

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

For the Japanese Yen:

It is relatively quiet week ahead.

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

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

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

Out of China

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

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

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

Geo-Politics

U.S Politics

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

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

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

EU Politics

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

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

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

The Stats

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

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

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

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

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

Out of the U.S

It was a busier week on the economic data front.

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

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

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

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

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

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

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

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

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

Out of the UK

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

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

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

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

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

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

Out of the Eurozone

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

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

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

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

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

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

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

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

For the European major indexes, it was mixed week.

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

For the Loonie

It was a relatively quiet week.

Key stats included February inflation and January retail sales figures.

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

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

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

Elsewhere

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

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

For the Aussie Dollar

It was another quiet week.

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

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

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

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

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

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

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

For the Kiwi Dollar

It was a particularly quiet week.

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

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

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

For the Japanese Yen

It was a busier week.

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

The stats were positive for the Japan economy.

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

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

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

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

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

Out of China

It was a busier week on the data front.

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

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

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

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

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

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

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

FX Price Action: Beginning or End of the Punch?

Although the price action has felt choppy, a few trend moves have been underway. Consider that US Treasury yields (3yr through 30yr) have moved higher for the sixth consecutive week. The CRB Index rose for the seventh consecutive week and has only fallen one week this year. It is up over15.5% so far this year. Crude oil consolidated in recent days after rising dramatically since the bottoming on November 2 (The outcome of Georgia’s special election that gave the Democratic Party its parity in the Senate is not even identifiable on the chart of oil or bonds).

The dollar finished the week on a firm note. Divergence has been underlined. The ECB’s intention to (significantly) step-up bond purchases, while the US goes from a $1.9 trillion fiscal stimulus measures to initiating infrastructure negotiations that could be as large as the stimulus. On top of that, an executive order forces states to ensure that all willing adults can be vaccinated in early May. Still, the dollar’s advance seems mature. Against many currencies, the nadir was reached in the first week of January.

Dollar Index:

On last week’s pullback, the Dollar Index largely held the (38.2%) retracement objective of this month’s rally, which came in near 91.40 (actual low ~91.36) and bounced. It stalled in front of 92.00. A move above there signals a retest on the 92.50 area seen earlier in March. We had suggested a 92.75 measuring target from a bottoming pattern and note that the 200-day moving average is near 92.85 now. The momentum indicators are elevated and may be rolling over but do not stand in the way of a marginal new high.

Euro:

The single-currency extended its post-US job report losses in the first part of last week, falling to almost $1.1835. It rebounded to about $1.1990, which corresponds with the (38.2%) retracement objective of the downtrend since the February 25 high near $1.2245. Ahead of the weekend, it tested the upper end of a band of support that is seen been $1.1895 and $1.1915. A break signal a test on the recent low near $1.1835 and the 200-day moving average (~$1.1840). Recall that around last November election was $1.16. The MACD and Slow Stochastic appear to be turning up from over-extended territory. It seems to be closer to the end of the boxer’s punch than the start of it.

Japanese Yen:

The dollar pushed to almost JPY109.25 early last week, backed off to around JPY1080.35, and made another attempt to establish a foothold about JPY109. However, for the second time last week, it failed to close above it. The MACD continues to trend higher, but the Slow Stochastic is rolling over. The 50-day moving average is poised to cross above the 200-day moving average (deadman’s cross or golden cross) around the middle of next week. The JPY110 area offers psychological resistance for the dollar.

It has not finished a month above it since April 2019. Rising oil prices impact Japan through the trade channel (boosting imports) and the exchange rate that appears sensitive to rising US rates. A break below the JPY108.30 area could signal a near-term top is in place and project initially toward JPY107.60. The BOJ may confirm a change in tactics in its ETF purchases, but the exchange rate seems to be more a function of international developments rather than domestic.

British Pound:

Sterling peaked around $1.4235 on February 24, solidified a shelf in the $1.3780-$13800 area at the start of last week. The subsequent buying lifted sterling briefly and marginally above $1.40. However, as part of the broad dollar recovery, sterling tumbled to around $1.3860 ahead of the weekend. The trendline drawn off the December lows and early February low begins the new week near $1.3850, and a convincing break could signal a 1.5-2.0-cent decline. The technical indicators are mixed.

The MACD has returned to neutrality and has gone mostly sideways in recent days. The Slow Stochastic, on the other hand, is curling up from oversold territory. The close before the weekend was near the middle of the session’s range. A convincing move above $1.40 would target the recent high. The Bank of England, like the other major central banks that have met since bond yields have risen, is expected to highlight the weakness of the labor market and the transitory and technical nature of the anticipated increase in prices.

Canadian Dollar:

The US dollar fell by about 1.5% against the Canadian dollar last week, the most among the major currencies and the largest weekly loss of the year. The jobs reports showed employment surged by nearly 260k last month, which was more than three times greater than the median forecast in Bloomberg’s survey. Unemployment fell to 8.2% from 9.4% even while the participation rate was steady. The greenback fell to a margin new three-year low, around CAD1.2460.

The snapback in the labor market, coupled with the spillover of the US fiscal stimulus, and progress with the vaccine, should allow the Bank of Canada at its April meeting to signal its intentions to taper its C$4 bln weekly bond purchases perhaps by the end of Q2. The momentum indicators favor further US dollar weakness. The next important band of support is CAD1.2250-CAD1.2350, and I suspect the CAD1.2400 area may be sticky. However, the immediate note of caution is that the US dollar finished the week below its lower Bollinger Band (~CAD1.2500).

Australian Dollar:

Ahead of the weekend, the Australian dollar tested the $0.7800 level and found sellers waiting that took it back down nearly 1% before bids were found just in front of the previous session’s low. The MACD and Slow Stochastic are turning up as the correction since the February 25 high above $0.8000 appears to have run its course (bottoming near $0.7625). A move above $0.7820 is needed to reanimate the uptrend. The pre-weekend activity may have been consolidative in nature. The Aussie rose a little less than 1% (more than all but the Canadian dollar and Norwegian krone, among the majors) to post its first increase in three weeks. Next week, Australia is expected to report a pick-up in job growth and retail sales in February.

Mexican Peso:

The US dollar began last week, extending its advance to almost MXN21.6360, its highest level since spike as US polls closed last November. The dollar’s four-day rally was followed by a three-day slide that saw it shed about 4.2% and saw it approach the previous week’s low near MXN20.55. Although the dollar consolidated ahead of the weekend against the peso, the momentum indicators suggest the path of least resistance is lower for the greenback. The next area of chart support is close to MXN20.35. For the first time in a year, the 60-day rolling correlation of the dollar-peso exchange rates and the 10-year yield has turned positive, and that correlation is the highest since early 2017 (0.83).

Chinese Yuan:

Chinese stocks are underperforming this year. Among the large markets, it is the only one that is down. An attempt to lend official support to stocks during the National People’s Congress was not successful, as reported in the press. The PBOC’s ability to manage the currency has been a bit more successful. The US dollar set new highs for Q1 last week (~CNY6.5440) and then pulled back to around CNY6.4775, just above the 20-day moving average (~CNY6.4760) which may mark the near-term range. A week before top Biden administration officials will meet with senior Chinese officials for the first time, the US deemed it necessary to tighten up the sanctions on Huawei.

It would seem to deter a goodwill gesture by Chinese officials of allowing the yuan to rise, even if the greenback is otherwise bid, for example. Meanwhile, while the interest rate premium offered by Chinese government bonds over Treasuries (10-year) has narrowed by more than 60 bp to about 160 bp this year, the low volatility contributes to portfolio construction decisions. The 3-month implied volatility for the yuan is about 5.5%, which is nearly a percentage point below the least volatile of the majors (euro).

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

This article was written by Marc Chandler, MarctoMarket.

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

On the Macro

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

For the Dollar:

It’s a busier week ahead.

NY Empire State manufacturing numbers get things going on Monday.

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

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

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

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

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

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

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

For the EUR:

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

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

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

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

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

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

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

For the Pound:

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

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

Expect plenty of movement before, during, and after.

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

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

For the Loonie:

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

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

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s another quiet week.

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

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

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

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

For the Kiwi Dollar:

It’s another quiet week ahead.

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

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

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

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

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

For the Japanese Yen:

It is busier quiet week ahead.

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

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

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

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

Out of China

It’s a relatively busy week ahead.

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

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

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

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

Geo-Politics

U.S Politics

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

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

EU Politics

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

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

The Stats

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

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

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

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

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

Out of the U.S

It was a quieter week on the economic data front.

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

The stats were skewed to the positive.

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

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

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

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

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

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

Out of the UK

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

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

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

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

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

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

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

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

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

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

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

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

Out of the Eurozone

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

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

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

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

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

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

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

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

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

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

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

For the Loonie

It was a relatively quiet week.

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

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

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

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

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

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

Elsewhere

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

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

For the Aussie Dollar

It was a quiet week.

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

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

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

For the Kiwi Dollar

It was also a quiet week.

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

The stats were skewed to the negative.

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

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

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

For the Japanese Yen

It was another relatively busy week.

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

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

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

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

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

Out of China

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

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

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

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

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

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

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

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

On the Macro

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

For the Dollar:

It’s a quieter week ahead.

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

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

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

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

For the EUR:

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

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

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

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

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

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

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

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

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

For the Pound:

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

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

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

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

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

For the Loonie:

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

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

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

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

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

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

Out of Asia

For the Aussie Dollar:

It’s a quiet week.

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

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

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

For the Kiwi Dollar:

It’s another quiet week ahead.

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

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

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

For the Japanese Yen:

It is another quiet week ahead.

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

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

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

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

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

Out of China

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

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

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

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

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

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

Geo-Politics

U.S Politics

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

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

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

The Weekly Wrap – Rising Yields and A Dollar Resurgence Was the Story of the Week

The Stats

It was a busier week on the economic calendar, in the week ending 5th March.

A total of 70 stats were monitored, following 52 stats from the week prior.

Of the 70 stats, 40 came in ahead forecasts, with 25 economic indicators coming up short of forecasts. There were 5 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 33 stats, 28 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive week in the green, in the week ending 5th March. The Dollar Spot Index rallied by 1.22% to end the week at 91.985. In the previous week, the Dollar had risen by 0.57% to 90.879.

FED Chair Powell’s speech from Thursday delivered 91 levels for the Dollar.

Out of the U.S

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

In the first half of the week, private sector PMI figures were in focus along with ADP nonfarm employment numbers.

It was a mixed set of stats for the markets.

While manufacturing sector activity picked up in February, service sector growth hit a speed bump.

In February, the ISM Manufacturing PMI rose from 52.6 to 54.4. The Non-Manufacturing PMI, however, fell from 58.7 to 55.3.

The ADP numbers were not much better. In February, nonfarm employment rose by 117k in February, according to the ADP. Economists had forecast a 177k rise.

On Thursday, the market attention shifted to the weekly jobless claims figures ahead of the government labor market numbers on Friday.

In the week ending 26th February, initial jobless claims increased from 736k to 745k.

At the end of the week, nonfarm payrolls impressed, however, with a 379K jump in February. The better-than-expected rise took the unemployment rate down from 6.3% to 6.2%.

In January, nonfarm payrolls had risen by a more modest 166k.

On the monetary policy front, FED Chair Powell fueled a Dollar rally overnight on Thursday. Powell failed to address the issue of rising yields, which suggested a willingness to allow yields to rise further.

In the equity markets, the NASDAQ fell by 2.06%, while the Dow and S&P500 rose by 1.82% and by 0.81% respectively.

Out of the UK

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

Finalized private sector PMI figures for February were in focus along with the Tories annual budget release.

It was a mixed set of numbers for the Pound.

An upward revision to the manufacturing PMI was offset by a downward revision to the services PMI.

Late in the week, construction PMI figures for February had a muted impact on the Pound.

In February, the construction sector joined the manufacturing sector in expansion, with the PMI rising from 49.2 to 53.3.

From the UK government, the annual budget failed to move the dial.

In the week, the Pound fell by 0.66% to end the week at $1.3841. In the week prior, the Pound had fallen by 0.59% to $1.3933.

The FTSE100 ended the week up by 2.27%, reversing a 2.12% slide from the previous week.

Out of the Eurozone

It was a particularly busy week on the economic data front, with private sector PMI figures in focus.

While the manufacturing sector continued to deliver, service sector woes left the Eurozone Composite at 48.8 in February. A continued contraction highlighted some uncertainty towards the economic recovery.

Other stats included German and Eurozone inflation, retail sales and unemployment figures.

The stats were skewed to the negative, however, with a retail sales slump in January worse than expected.

At the end of the week, the German economy was back in focus. Factory orders rose by a larger than anticipated 1.4% and were up by 3.7% when compared with Feb-2020.

For the week, the EUR slid by 1.33% to $1.1915. In the week prior, the EUR had fallen by 0.36% to $1.2075.

For the European major indexes, it was bullish week. The CAC40 rose by 1.39%, with the DAX30 and EuroStoxx600 gaining 0.97% and 0.88% respectively. A bearish end to the week left the majors with relatively modest gains.

For the Loonie

It was a busy week.

4th quarter GDP figures were in focus in the 1st half of the week.

The figures revealed a slowdown in growth from the 3rd quarter, aligned with economies elsewhere.

Quarter-on-quarter, the economy grew by 2.3%, while contacting by 3.23% year-on-year.

In December, the economy expanded by a modest 0.1%, slowing from 0.8% growth in November.

At the end of the week, the focus shifted to January trade data and February’s Ivey PMI

In January, the trade balance jumped from a C$1.98bn deficit to a C$1.41bn surplus. A more marked increase in exports led to the return to a trade surplus mid-way through the quarter.

For February, the Ivey PMI was also Loonie positive, jumping from 48.4 to 60.0. While an impressive figure, the market impact was limited as a result of market concerns over yields.

In the week ending 5th March, the Loonie fell by 0.62% to C$1.2659. In the week prior, the Loonie had fallen by 0.57% to C$1.2738.

Elsewhere

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

In the week ending 5th March, the Aussie Dollar fell by 0.26% to $0.7686, with the Kiwi Dollar ending the week down by 0.91% to $0.7167.

For the Aussie Dollar

It was a busy week.

Early in the week, manufacturing and company gross operating profit figures were in focus.

It was a mixed bag, with manufacturing sector activity improving in February.

4th quarter profits were dire, however, sliding by 6.6% in the 4th quarter. In the 3rd quarter, company gross operating profits had risen by 3.2%.

In the 2nd half of the week, GDP, retail sales, and trade data were in focus.

The stats were skewed to the positive. The economy contracted by less than had been anticipated, with the trade surplus widening off the back of a marked pickup in exports.

Retail sales figures came up short of prelim numbers but still recovered from December’s 4.1% slide.

On the monetary policy front, the RBA was also in action but stood pat following the previous month’s surprise move.

For the Kiwi Dollar

It was a particularly quiet week.

Economic data was limited to building consent figures that had a muted impact on the Kiwi Dollar

For the Japanese Yen

It was a relatively busy week.

Finalized private sector PMIs for February and 4th quarter capital spending figures were in focus.

The stats were skewed to the positive in the week, though not enough to prevent a Yen slide to ¥108 levels.

In February, the manufacturing sector returned to expansion, with the PMI rising from 49.8 to 51.4.

The services sector continued to contract, however, with the PMI rising from 46.1 to 46.3.

Capital expenditure saw further decline in the 4th quarter, though to a lesser extent than in the previous quarter. Year-on-year, capital expenditure was down by 4.8%. In the 3rd quarter, CAPEX had been down by 10.6%.

The Japanese Yen slid by 1.63% to ¥108.31 against the U.S Dollar. In the week prior, the Yen had fallen by 1.06% to ¥106.57.

Out of China

It was a busier week on the data front, with private sector PMI figures for February in focus.

The stats were skewed to the negative, with growth across the private sector slowing moderately mid-way through the quarter.

In February, the market’s favored Caixin manufacturing PMI fell from 51.5 to 50.9, with the services PMI falling from 52.0 to 51.5.

As a result, the composite PMI slipped from 52.2 to 51.7.

Common themes across the PMI numbers from China and beyond were rising prices but also marked increases in optimism.

In the week ending 5th March, the Chinese Yuan fell by 0.36% to CNY6.4970. In the week prior, the Yuan had fallen by 0.25% to CNY6.4737.

The CSI300 fell by 1.39%, while the Hang Seng rose by 0.41%.

The Week Ahead – A Particularly Busy Economic Calendar Will Test the Markets…

On the Macro

It’s a busy week ahead on the economic calendar, with 73 stats in focus in the week ending 5th March. In the week prior, 52 stats had been in focus.

For the Dollar:

It’s a busy week ahead.

Private sector PMI and ADP employment change figures for February are in focus in the 1st half of the week.

For the private sector the ISM Manufacturing and Non-Manufacturing PMIs are due out on Monday and Wednesday.

On Wednesday, ADP Nonfarm Employment Change figures for February will also be in focus.

The market focus will then shift to the weekly jobless claim figures on Thursday ahead of the labor market numbers on Friday.

On Friday, expect the unemployment rate and nonfarm payroll figures to be the key drivers.

Other stats in the week include finalized Markit survey PMI numbers, factory orders, and trade data. We don’t expect the stats to have a material impact on the markets, however.

The Dollar Spot Index ended the week up by 0.57% to 90.879.

For the EUR:

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

On Monday and Wednesday, private sector PMI numbers for Italy and Spain are due out.

Finalized numbers for France, Germany, and the Eurozone will also draw interest.

Following impressive prelim manufacturing PMI numbers, however, only a marked downward revision would test EUR support.

On Tuesday, German retail sales and unemployment figures will provide the EUR with direction.

The focus will then shift to retail sales and unemployment figures for the Eurozone on Thursday.

German factory orders for January wrap things up. The numbers will need to be aligned with recent survey-based numbers to support the EUR and the broader market.

From the ECB, the Economic Bulletin on Thursday will also draw plenty of interest. How the ECB’s views inflation and the economic outlook will be key…

The EUR ended the week down by 0.36% to $1.2075.

For the Pound:

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

Finalized manufacturing and service PMI numbers are due out on Monday and Wednesday.

Expect any revisions to provide the Pound with direction ahead of construction PMI numbers on Thursday.

While we can expect the numbers to influence, progress on the vaccination front remains key near-term.

From the UK government, the government will also release its annual budget on Wednesday. The markets will be looking to see by how much the UK government has loosened the purse strings to support an economic recovery. Government debt has already rocketed to pre-1970 levels as percentage of GDP…

The Pound ended the week down by 0.59% to $1.3933.

For the Loonie:

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

4th quarter and December GDP numbers are due out Tuesday ahead of trade data on Friday.

Other stats in the week include labor productivity and Ivey PMI numbers that will likely have a muted impact on the Loonie.

While key stats will influence, crude oil inventories will also provide direction in the week.

The Loonie ended the week down by 0.98% to C$1.2738 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busy week.

In the early part of the week, manufacturing and gross operating profit figures are in focus.

The focus will then shift to 4th quarter GDP numbers on Wednesday. Following the RBA’s monetary policy decision from February, expect plenty of sensitivity to the numbers.

Retail sales and trade data wrap things up on Thursday. January numbers will need to impress to support the Aussie Dollar

On the monetary policy front, the RBA monetary policy decision on Tuesday will set the tone.

The Aussie Dollar ended the week down by 2.07% to $0.7706.

For the Kiwi Dollar:

It’s a quiet week ahead.

Economic data is limited to building consent figures due out on Wednesday.

The numbers are unlikely to have a material impact, however.

With economic data on the lighter side, expect market risk sentiment to drive the Kiwi in the week.

China’s private sector PMI figures for February will influence in the 1st half of the week.

The Kiwi Dollar ended the week down by 0.90% to $0.7233.

For the Japanese Yen:

It is also a quiet week ahead.

Jobs data and 4th quarter capital spending figures are due out early in the week.

Expect capital spending to draw the greatest interest.

Finalized private sector PMI figures for February are also due out on Monday and Wednesday. Barring any material revision from prelim figures, however, the numbers should have limited impact on the Yen and the broader market.

The Japanese Yen ended the week down by 1.06% to ¥106.57 against the U.S Dollar.

Out of China

It’s a busier week ahead. The market’s preferred Caixin Manufacturing PMI on Monday will set the tone for the week.

On Wednesday, the Caixin Services PMI for February will also influence market risk sentiment.

Ahead of the stats, NBS private sector numbers from the weekend will also influence at the start of the week.

The Chinese Yuan ended the week down by 0.25% to CNY6.4737 against the U.S Dollar.

Geo-Politics

U.S Foreign Policy

Iran is back in the spotlight, as the EU and the U.S look to begin talks on the nuclear agreement.

Airstrikes last week were a clear message of intent from the new U.S administration.

How Iran responds will be of particular interest. Further destabilization in the Middle East will be something the markets would prefer to avoid.

While U.S and Iran relations will be front and center, U.S – China news will also need monitoring in the week.

The Weekly Wrap – Reinflation Fears Overshadowed Economic Data to Drive Dollar Demand

The Stats

It was a quieter week on the economic calendar, in the week ending 26th February.

A total of 52 stats were monitored, following 72 stats from the week prior.

Of the 52 stats, 27 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 26 stats, 22 reflected a deterioration from previous.

For the Greenback, it was back into the green, following two consecutive weeks in the red. The Dollar Spot Index rose by 0.57% to end the week at 90.879. In the previous week, the Dollar had fallen by 0.13% to 90.364.

Out of the U.S

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

The first half of the week was relatively quiet, however, with consumer confidence figures the key stat on Tuesday.

Consumer confidence was on the rise in February, supporting the market’s optimistic outlook on the economic recovery.

On Thursday, jobless claims and core durable goods orders were also positive.

Initial jobless claims fell back from 841k to 730k in the week ending 19th February.

There was also an upward revision to 4th quarter GDP figures. The U.S economy expanded by 4.1%, up from a 1st estimate 4.0%.

At the end of the week, inflation and personal spending figures also drew plenty of attention.

In January, personal spending jumped by 2.4%, more than reversing a 0.4% decline from December.

Inflationary pressures were also on the rise, albeit marginally. The FED’s preferred Core PCE Price Index ticked up from 1.4% to 1.5% at the start of the year.

On the monetary policy front, FED Chair Powell looked to calm market nerves over inflationary jitters over 2-days of testimony.

The calming was short-lived, however, which ultimately led to a jump in the Dollar at the end of the week to close out in positive territory.

In the equity markets, the NASDAQ slid by 4.92%, with the Dow and S&P500 falling by 1.78% and by 2.45% respectively.

Out of the UK

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

On Tuesday, December’s unemployment rate and January’s claimant count figures were in focus.

Claimant counts rose by 20k, reversing a 20.4k fall from December. The unemployment rate ticked up from 5.0% to 5.1% in December.

While the numbers were Pound negative, government plans to ease lockdown measures supported the Pound early in the week. The Pound had visited $1.41 levels before risk aversion sent the Pound back to sub-$1.40 levels.

In the week, the Pound fell by 0.59% to end the week at $1.3933. In the week prior, the Pound had risen by 1.21% to $1.4016.

The FTSE100 ended the week down by 2.12%, reversing a 0.52% gain from the previous week.

Out of the Eurozone

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

From Germany, both business and consumer confidence improved in February and March respectively. Better than expected figures provided EUR support ahead of a pullback later in the week.

German GDP numbers for the 4th quarter were also better than 1st estimate figures giving further support to the EUR.

At the end of the week, however, numbers from France disappointed. The French economy contracted by more than previously thought, with consumer spending sliding in January.

While the stats were skewed in favor of the EUR, risk aversion weighed at the end of the week to leave the EUR in the red.

On the monetary policy front, ECB President Lagarde spoke early in the week, stating that the ECB was monitoring bond yields closely. The comments came as market jitters began to creep in over possible reinflation that could curb spending and shift central bank policy outlooks.

For the week, the EUR fell by 0.36 % to $1.2075. In the week prior, the EUR had fallen by 0.01% to $1.2119.

For the European major indexes, it was bearish week. The CAC40 and the DAX30 fell by 1.22% and by 1.48% respectively, with the EuroStoxx600 sliding by 2.38%.

For the Loonie

It was a quiet week. The markets had to wait for Friday for RMPI numbers, the only stat of the week.

The RMPI jumped by 5.7% in January, following a 3.5% rise in December.

In spite of the positive numbers, however, risk aversion plagued the Loonie late in the week.

Mid-week the Loonie had visited C$1.24 levels, with a week high $1.24679 before falling back into the red.

In the week ending 26th February, the Loonie fell by 0.98% to C$1.2738. In the week prior, the Loonie had increased by 0.64% to C$1.2615.

Elsewhere

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

In the week ending 26th February, the Aussie Dollar slid by 2.07% to $0.7706, with the Kiwi Dollar ending the week down by 0.90% to $0.7233.

A Friday sell-off left the pair in the red for the week.

For the Aussie Dollar

It was a relatively quiet week.

Key stats included 4th quarter wage growth, construction work done, new CAPEX, and January private sector credit figures.

It was a mixed set of numbers that had limited impact on the Aussie Dollar.

Wage growth rose by 0.6% in the 4th quarter, following a 0.1% rise in the 3rd quarter, while construction work took an unexpected fall.

Private new CAPEX impressed, rising by 3% to reverse a 3% fall from the 3rd quarter.

On the credit side, however, private sector credit saw a softer increase, weighed by a further fall in personal credit.

While the stats were mixed, it was a shift in market sentiment late in the week pulled the Aussie Dollar into the red.

For the Kiwi Dollar

It was a busy week.

Retail sales, business confidence and trade data were in focus in the week.

The stats were skewed to the negative, with retail sales falling by more than expected in Q4.

Business confidence also softened in February, with new Zealand’s annual trade surplus narrowing in January.

On the monetary policy front, the RBNZ kept policy unchanged, which was in line with expectations. Unlike the RBA, the RBNZ held back from any surprise moves, giving the Kiwi Dollar a boost.

Risk aversion late in the week reversed the gains, however. The Kiwi Dollar had visited $0.74 levels before a late pullback.

For the Japanese Yen

It was a relatively quiet week, with no major stats until Friday.

At the end of the week, inflation, industrial production, and retail sales were in focus.

While retail sales were down by 2.4% in January, year-on-year, industrial production impressed, rising by 4.2%. In December, industrial production had fallen by 1.0%, with retail sales having fallen by 0.2%.

Deflationary pressure eased in February, which was also positive. Tokyo core consumer prices fell by 0.3% year-on-year, following a 0.4% decline in January.

While the stats were skewed in favor of the Yen, demand for the Dollar spiked as the week progressed, pulling the Yen into the red.

The Japanese Yen fell by 1.06% to ¥106.57 against the U.S Dollar. In the week prior, the Yen had fallen by 0.49% to ¥105.45.

Out of China

It was a particularly quiet week on the data front. There were no stats to provide the markets with direction in the week.

In the week ending 26th February, the Chinese Yuan fell by 0.25% to 6.4737. In the week prior, the Yuan had risen by 0.01% to CNY6.4577.

The CSI300 tumbled by 7.65%, with the Hang Seng sliding by 5.43%.

The Week Ahead – Economic Data and Capitol Hill in Focus

On the Macro

It’s a relatively busy week ahead on the economic calendar, with 51 stats in focus in the week ending 26th February. In the week prior, 72 stats had been in focus.

For the Dollar:

In the 1st half of the week, consumer sentiment figures for February are in focus. Following some disappointing Michigan numbers, expect a slide in the CB Consumer Confidence Index to test support for riskier assets.

After a quiet Wednesday, the focus then shifts to a busy end to the week.

On Thursday, core durable goods, 2nd estimate GDP numbers, and the weekly jobless claims are in focus.

Expect the numbers to draw plenty of attention ahead of inflation, trade, and personal spending figures on Friday.

With increased sensitivity to inflation, we can expect both the inflation and personal spending figures to be influence.

Other stats in the week include housing sector data, Chicago PMI figures, and finalized Michigan consumer sentiment numbers.

Barring dire numbers, however, the stats will likely have a muted impact on the markets.

The Dollar Spot Index ended the week down by 0.13% to 90.364.

For the EUR:

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

In the 1st half of the week, German business confidence figures for February are due out. Expect the headline IFO Business Climate Index to be the key driver.

On Wednesday and Thursday, the German economy remains in focus. 2nd estimate GDP numbers for the 4th quarter and March consumer sentiment figures will draw attention.

Barring revisions to GDP numbers, expect the consumer sentiment figures to have the greatest influence.

At the end of the week, French consumer spending and 2nd estimate GDP numbers for the 4th quarter will wrap things up.

Once more, barring a marked revision to 1st estimate numbers, expect the consumer spending figures to be the key driver.

The EUR ended the week down by 0.01% to $1.2119.

For the Pound:

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

December’s unemployment rate and January claimant count figures will be the key drivers.

Wage growth and 3-month rolling employment change figures will likely have less impact on the Pound.

Away from the stats, expect the UK government’s progress on vaccines and COVID-19 news to continue to influence.

The Pound ended the week up by 1.21% to $1.4016.

For the Loonie:

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

Economic data is limited to January RMPI figures due out on Friday.

While we expect the numbers to influence, crude oil inventory numbers and market risk sentiment will also provide direction.

The Loonie ended the week up by 0.64% to C$1.2615 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another relatively quiet week.

Key stats include 4th quarter private CAPEX and construction work done, along with private sector credit figures for January.

Expect CAPEX and private sector credit figures to have the greatest influence in the week.

The Aussie Dollar ended the week up by 1.30% to $0.7869.

For the Kiwi Dollar:

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

4th quarter retail sales figures kick things off on Tuesday. With borders closed, expect any weak numbers to test support for the Kiwi.

On Thursday, business confidence figures will also provide direction along with trade data on Friday.

The main event of the week, however, will be the RBNZ monetary policy decision on Wednesday…

After the RBA’s surprise move earlier in the month, will the RBNZ catch the markets off guard?

The Kiwi Dollar ended the week up by 1.05% to $0.7299.

For the Japanese Yen:

It is another busy week ahead.

February inflation and January industrial production and retail sales figures are in focus on Friday.

Expect the industry production and retail sales figures to have the greatest impact on the markets.

Ultimately, however, the numbers are unlikely to have too much impact on the Yen.

The Japanese Yen ended the week down by 0.49% to ¥105.45 against the U.S Dollar.

Out of China

It’s another quiet week ahead. There are no material stats due out of China to provide riskier assets with direction in the week.

The lack of stats will leave geopolitics in focus…

On the monetary policy front, the PBoC is in action on Monday. The markets are expecting the PBoC to leave loan prime rates unchanged, however.

The Chinese Yuan ended the week up by 0.01% to CNY6.4577 against the U.S Dollar.

Geo-Politics

U.S Politics

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

The markets will likely pay close attention to news updates on planned talks between the U.S and Iran.

There’s also China to keep an eye on.

On the fiscal stimulus front, there will be the hope of the Democrats delivering on the $1.9 trillion relief package this week.

COVID-19

Vaccination rates and availability of vaccines will remain a key area of interest.

As vaccines become more readily available, the next step is for key economies to ease restrictions.

New strains of the virus could weigh on a near-term economic recovery, however.