The Weekly Wrap – Economic data and political fluctuations gave the greenback a boost


Outside the United States

At the start of the week, inflation figures were in the spotlight.

In August, the annual core inflation rate fell from 4.3% to 4.0% against 4.2% expected. Although lower than expected, 4% continued to be well above the 2% target of the FED, leaving a tapering on the table.

By midweek, the NY Empire State’s industrial production and manufacturing numbers were positive for the market.

On Thursday, however, retail sales, the Philly FED manufacturing PMI and jobless claims numbers were more interesting.

In August, retail sales rose 0.7% from an expected decline of 0.2%. Core retail sales jumped 1.8% from a decline of 0.1%. In July, retail sales fell 1.1% and core retail sales fell 0.4%.

Manufacturing figures were also bullish, with the Philly Fed’s manufacturing PMI rising from 19.4 to 30.7 in September.

Unemployment claims figures did not impress, however, with the remaining less than 300,000 elusive. In the week ending 10e In September, the first jobless claims rose from 312,000 to 332,000. Economists had forecast an increase to 330k.

At the weekend, consumer sentiment improved, albeit moderately. In September, Michigan’s consumer sentiment index fell from 70.3 to 71.0, below the expected 72.0.

Outside the UK

It was also a busy week. The focus of attention was on employment, inflation and retail sales figures. The statistics were biased towards the positive.

In August, the number of claimants fell further by 58.6,000 after dropping to 48.9,000 in July. In July, the unemployment rate fell from 4.7% to 4.6%.

The UK’s annual inflation rate accelerated from 2.0% to 3.25 in August, also providing support to the pound sterling.

At the weekend, however, retail sales disappointed. On a monthly basis, core retail sales fell 1.2% in August, following a 3.2% decline in July. Retail sales fell 0.9% after falling 2.8% in July. Economists had forecast a pick-up in spending.

During the week, the pound fell 0.71% to end the week at $ 1.3741. The week before, the pound had fallen 0.23% to $ 1.3839.

The FTSE100 ended the week down 0.93%, following a loss of 1.53% from the previous week.

Outside the euro zone

The economic data included wage growth, industrial production, trade and final inflation figures for the euro area.

The finalized inflation figures for Spain, France and Italy were also released but had a moderate impact on the euro.

In the 2sd quarter, wages were down 0.4% year-on-year, partially offsetting a 2.1% increase recorded in the previous quarter.

Data on industrial production and trade were positive, however.

Output rose 1.5%, reversing a 0.1% drop from June, with the euro area’s trade surplus falling from € 17.7 billion to € 20.7 billion.

At the end of the week, the finalized inflation figures for the euro zone were in line with the preliminary figures. The euro area’s annual inflation rate accelerated from 2.2% to 3.0% in August.

On the week, the euro fell 0.75% to $ 1.1725. The previous week, the euro had fallen 0.56% to $ 1.1814.

The CAC40 lost 1.40%, the DAX30 and EuroStoxx600 ending the week with respective losses of 0.77% and 0.96%.

For the loonie

The economic data included manufacturing sales, inflation and wholesale sales figures.

The statistics were mixed during the week.

In July, both manufacturing and wholesale sales disappointed with respective declines of 1.5% and 2.1%.

Providing support, however, was an acceleration of the annual inflation rate from 3.3% to 3.5%.

The resumption of inflationary pressures and the rise in oil prices were not enough to support the loonie against the greenback.

In the week ending 17the In September, the loonie fell 0.57% to C $ 1.2764. During the previous week, the loonie had fallen 1.34% to C $ 1.2692.

Somewhere else

It was another bearish week for the Australian dollar and the Kiwi dollar.

The Australian dollar fell 1.05% to $ 0.7279, with the Kiwi dollar ending the week down 1.03% to $ 0.7040.

For the Australian dollar

Business and consumer confidence figures were prominent in the 1st half the week.

Despite the latest lockdown measures, the statistics were biased towards the positive.

The NAB Business Confidence Index fell from -8 to -5 in August.

More importantly, the Westpac Consumer Sentiment Index rose 2.0% in September. The index fell 4.4% in August.

However, the employment figures disappointed on Thursday.

In August, full employment fell 68k after falling 4.2k in July. Employment, however, fell 146.3k, compared to an expected decline of 90.0k. In July, employment increased by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate falling from 66.0% to 65.2%.
  • Year on year, the number of unemployed has fallen by 298,000.

For the Kiwi Dollar

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

2sd GDP figures for the quarter were impressive, with New Zealand’s economy growing 2.8% quarter-over-quarter. The economy had grown more modestly of 1.4% in the previous quarter.

On the negative side, however, there was a drop in the business PMI index from 62.6 to 40.1 in August. The figures reflect the impact of the latest foreclosure measures on production, justifying the RBNZ’s decision to leave the cash rate unchanged.

For the Japanese yen

It has been a relatively quiet week, with negative numbers.

According to final figures, industrial production fell 1.5% in July. Although in line with preliminary figures, this was a partial reversal of a 6.5% jump from June.

In August, Japan’s trade balance fell from a surplus of 439.4 billion yen to a deficit of 635.4 billion yen. Exports rose 26.2% year on year, after increasing 37% in July.

The Japanese yen rose 0.01% to 109.93 yen against the US dollar. During the previous week, the yen had fallen 0.21% to 109.94 yen.

Outside of china

The figures for capital investment and industrial production were in the spotlight in midweek.

There were even more disappointing figures from China for the markets to take into account.

In August, capital investment increased 8.9% year-on-year. This was less than a 10.3% increase in July.

More significantly, industrial production rose 5.3% in August against 6.4% in July.

In the week ending 17the In September, the Chinese yuan fell 0.34% to CNY6.4661. The previous week, the yuan had ended the week up 0.18% to 6.4443 CNY.

The CSI300 and Hang Seng ended the week down 3.14% and 4.90% respectively.


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