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

Out of the U.S

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

In the 1st half of the week, JOLTs job openings for September disappointed. Falling from 6.493m to 6.440m, it was yet another red flag for the labor market.

The focus then shifted to October inflation and the weekly jobless claims figures on Thursday.

Inflationary pressures eased at the turn of the quarter, with the annual core rate of inflation softening from 1.7% to 1.6%. Core consumer price and consumer prices both stalled in the month of October.

Jobless claims figures were a little more upbeat but not enough to ease concerns over labor market conditions.

In the week ending 6th November, initial jobless claims came in at 709k, down from the previous week’s 757k.

At the end of the week, prelim November consumer sentiment and October wholesale inflation figures were also in focus.

The Michigan Consumer Sentiment Indicator fell from 81.8 to 77.0. Concerns over the 2nd wave of the COVID-19 pandemic and economic uncertainty weighed.

Wholesale inflation figures also disappointed, with the core Producer Price Index rising by just 0.10% in October. In September, the core producer price index had risen by 0.4%.

In the equity markets, the NASDAQ fell by 0.55%, while the Dow and S&P500 saw gains of 4.08% and 2.16% respectively.

Out of the UK

It was a busy week on the economic data front.

Early in the week, retail sales and unemployment numbers were in focus.

In October, retail sales rose by 5.2%, year-on-year, falling short of a 6.1% rise in September. Also disappointing were average earnings, which fell by 1.3%, and rolling quarter unemployment numbers. In the 3-months to September, employment tumbled by 164k, following a 153k fall to August.

As a result, the unemployment rate rose from 4.5% to 4.8%. On the positive, however, was an unexpected 29.8k slide in claimant counts in October. In September, claimant counts had tumbled by 40.2k.

In the 2nd half of the week, 3rd quarter GDP, industrial production, and manufacturing production figures disappointed.

Quarter-on-quarter, the economy grew by 15.5%, failing to reverse a 19.8% contraction from the 2nd quarter.

Month-on-month, the economy expanded by just 1.1% in September, which was weaker than 2.1% growth in August. The economy contracted by 9.6%, year-on-year. In August, the economy had contracted by 21.5%.

At the end of the 3rd quarter, manufacturing production rose by just 0.2%, with industrial production rising by 0.5%. Manufacturing production had risen by 0.90% in August.

Away from the economic calendar, a failure to make progress towards a Brexit agreement also pegged the Pound back in the week.

In the week, the Pound rose by 0.26% to $1.3189. In the week prior, the Pound had rallied by 1.61% to $1.3156.

The FTSE100 ended the week up by 6.88%, following on from a 5.97% gain in the previous week.

Out of the Eurozone

It was a quieter week on the economic data front.

In the 1st half of the week, German trade data and ZEW Economic Sentiment figures were in focus.

A widening in Germany’s trade surplus failed to impress, with the latest spike in new COVID-19 cases weighing.

ZEW Economic Sentiment figures for Germany and the Eurozone disappointed. In November, Germany’s ZEW Economic Sentiment Indicator slid from 56.1 to 39.0. The Eurozone’s indicator fell from 52.3 to 32.8, reflecting investor sentiment towards the latest lockdown measures.

In the 2nd half of the week, the ECB’s Economic Bulletin raised more red flags over the economic outlook.

Eurozone industrial production figures also disappointed, with production falling by 0.4% in September.

At the end of the week, 3rd quarter GDP numbers for the Eurozone failed to move the dial. 2nd estimates came up short of 1st estimates. Quarter-on-quarter, the economy grew by 12.6%, coming up short of the 1st estimate of 12.7%. Year-on-year, the economy contracted by 4.4%, which was worse than the 1st estimate of 4.3%.

Finalized inflation figures from Germany, France, and Spain, and Eurozone trade data had a muted impact in the week.

On the monetary policy front, ECB President Lagarde assured the markets of more support next month. The comments came following upbeat vaccine trial numbers from Pfizer Inc.

For the week, the EUR fell by 0.34% to $1.1834. In the week prior, the EUR had rallied by 1.95% to $1.1874.

For the European major indexes, it was another bullish week. The CAC40 rallied by 8.45%, with the DAX30 and EuroStoxx600 gaining 4.78% and 5.13% respectively.

For the Loonie

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

There were no stats to provide the Loonie with direction. A lack of stats left the Loonie in the hands of market risk sentiment and crude oil prices.

Market jitters over the economic recovery and near-term outlook weighed on the Loonie in the week. Crude oil prices spiked early in the week, however, supported by COVID-19 vaccine news. The jump in crude oil prices cushioned the Loonie to a certain extent.

In the week ending 13th November, the Loonie fell by 0.67% to C$1.3137. In the week prior, the Loonie had rallied by 2.03% to C$1.3050.

Elsewhere

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

In the week ending 13th November, the Aussie Dollar rose by 0.17% to $0.7270, with the Kiwi Dollar rising by 1.05% to end the week at $0.6845.

For the Aussie Dollar

It was a quiet week on the economic calendar.

Key stats included October business confidence and November consumer confidence numbers.

Business confidence improved in October, with the NAB Business Confidence Index rising from -4 to +5.

Consumer confidence also saw further improvement, with the Westpac Consumer Sentiment Index rising by 2.5% to 107.7%. While this was positive, the rise fell short of a forecasted 3.8% increase.

Following the RBA’s monetary policy easing in the week prior, both will need to see a marked improvement in the coming months.

Uncertainty stemming from the 2nd wave of the COVID-19 pandemic, however, remains a drag.

For the Kiwi Dollar

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

In the first half of the week, electronic card retail sales jumped by 8.8% in October. Following a 5.4% rise in September, it was an impressive set of figures.

At the end of the week, October’s business PMI fell from 54.0 to 51.7, however, to pin back the Kiwi.

While the stats did influence, the RBNZ monetary policy decision on Wednesday was the main event.

The RBNZ held interest rates unchanged at 0.25%, which was in line with expectations. There was further talk of negative rates, however, as members noted that a failure to deliver additional support would lead to further weakness in labor market conditions near-term.

For the Japanese Yen

It was a quiet week on the economic calendar.

Current account figures for September had a muted impact on the Japanese Yen.

A continued rise in new COVID-19 cases led to the demand for the Dollar, ultimately weighing on the Yen.

The Japanese Yen slid by 1.24% to ¥104.63 against the U.S Dollar. In the week prior, the Yen had rallied by 1.25% to ¥103.35.

Out of China

It was a quiet week on the economic data front.

October inflation figures disappointed, with consumer prices falling by 0.3% in October. As a result, the annual rate of inflation softened from 1.7% to 0.5%.

Wholesale inflation figures were not much better. Year-on-year, the producer price index fell by 2.1%, following a 2.1% decline in September.

In the week ending 13th November, the Chinese Yuan rose by 0.09% to CNY6.6065. In the week prior, the Yuan had risen by 1.18%. The downside came in spite of Biden’s Presidential Election victory.

The CSI300 fell by 0.59%, while the Hang Seng ended the week up by 1.73%.


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