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The Weekly Wrap – COVID-19 Vaccine and Brexit Updates and Economic Data were in Focus

Out of the U.S

It was a busy week on the economic data front.

In the 1st half of the week, ISM Manufacturing PMI and ADP Nonfarm Employment Change figures were in focus.

The stats were skewed to the negative. Manufacturing sector growth slowed in November, with an increase in payrolls coming up short of expectations.

In the 2nd half of the week, service sector activity and labor market conditions remained in focus.

Initial jobless claims eased back from 778k to 712k in the week ending 27th November.

Service sector growth slowed in November, however, with the ISM Services PMI falling from 56.6 to 55.9.

Wrapping things up were the all-important nonfarm payroll figures and U.S unemployment rate.

A 245k increase in nonfarm payrolls led to a slip in the unemployment rate from 6.9% to 6.5%. The markets had anticipated a 469k jump in nonfarm payrolls, however.

In the equity markets, the NASDAQ rose by 2.12%, while the Dow and S&P500 gaining 1.03% and 1.67% respectively.

Out of the UK

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

Finalized private sector PMI and construction PMI numbers for November were in focus.

The stats had a muted impact on the Pound, however. For the Pound, Brexit updates remained the key driver in the week, with Barnier in London attempting to find a way forward.

Hopes of an agreement continued to drive support, leading to a move through to $1.34 levels. Uncertainty going into the weekend remained, however, preventing a breakout.

In the week, the Pound rose by 0.98% to $1.3441. In the week prior, the Pound had risen by 0.27% to $1.3311.

The FTSE100 ended the week up by 2.87%, following on from a 0.25% gain in the previous week.

Out of the Eurozone

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

Private sector PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone were headline stats.

There were few surprises, with private sector activity taking a hit as a result of the 2nd wave of the COVID-19 pandemic.

The Eurozone Composite fell from 50.0 to 45.3 in November, with service sector activity doing the damage.

Other stats included unemployment, retail sales, and factory order figures out of Germany that impressed.

Deflationary pressures were on the rise, however, supporting an ECB move next week.

Ultimately, it was progress towards a COVID-19 vaccine, however, that muted the effect of weak economic data.

For the week, the EUR rallied by 1.32% to $1.2121. In the week prior, the EUR had risen by 0.89% to $1.1963.

For the European major indexes, it was a mixed week. The CAC40 and EuroStoxx600 rose by 0.20% and by 0.21% respectively, while the DAX30 fell by 0.28%.

For the Loonie

It was a relatively busy week on the economic data front, ahead of next week’s BoC monetary policy decision.

Key stats included 3rd quarter GDP, October trade, and November employment figures.

The stats were mixed in the week. The Canadian economy failed to rebound from the 2nd quarter meltdown, contracting by 5.16%, year-on-year.

Trade and employment figures at the end of the week were skewed to the positive, however. While the trade deficit narrowed marginally, employment rose by a further 62.1K, bringing the unemployment rate down from 8.9% to 8.5%.

With economic data Loonie positive, COVID-19 vaccine news also delivered support for riskier assets in the week.

In the week ending 4th December, the Loonie rallied by 1.58% to C$1.2784. In the week prior, the Loonie had risen by 0.81% to C$1.2989.

Elsewhere

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

In the week ending 4th December, the Aussie Dollar rose by 0.51% to $0.7425, with the Kiwi Dollar gaining 0.30% to end the week at $0.7077.

For the Aussie Dollar

It was a relatively busy week on the economic calendar.

Key stats included company gross profit and manufacturing figures on the 1st half of the week.

The stats were skewed to the negative. Company gross operating profits came up short of forecasts, with manufacturing sector activity seeing slower growth.

Stats in the 2nd half of the week, however, were more material with 3rd quarter GDP, trade, and retail sales in focus.

By contrast, the stats were skewed to the positive, delivering Aussie Dollar support.

While the trade surplus widened, retail sales figures at the end of the week were key. In October, retail sales rose by 1.4%, according to finalized figures, falling short of a prelim 1.5% rise. In September sales had fallen by 1.1%. The jump was attributed to Victoria State’s reopening.

For the Kiwi Dollar

It was a quiet week on the economic calendar.

Key stats included November business confidence and October building consent figures. The stats were skewed to the positive, delivering Kiwi Dollar support.

While the stats were positive, impressive PMI numbers out of China and COVID-19 vaccine news were the key drivers.

For the Japanese Yen

It was a busier week on the economic calendar.

October retail sales and prelim industrial production figures were in focus at the start of the week.

The numbers were upbeat, with retail sales jumping by an unexpected 6.4%.

Industrial production also continued to rise, reflecting a pickup in demand at the turn of the quarter.

In the week, finalized private sector PMIs came in ahead of prelim figures. The impact on the Yen was muted, however, with both the services and manufacturing sectors contracting in October.

Improved market risk appetite weighed on the Yen in the week, with COVID-19 vaccine news supporting riskier assets.

The Japanese Yen fell by 0.08% to ¥104.17 against the U.S Dollar. In the week prior, the Yen had fallen by 0.22% to ¥104.09.

Out of China

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

Both the NBS and Caixin PMIs for the services and manufacturing sectors rose in November.

The all-important Caixin Manufacturing PMI increased from 53.6 to 54.9 in November.

While the stats delivered support, Biden’s plan to keep the phase 1 trade agreement was negative.

In the week ending 4th December, the Chinese Yuan rose by 0.71% to CNY6.5316. In the week prior, the Yuan had fallen by 0.23% to CNY6.5781.

The CSI300 rose by 1.71%, while the Hang Seng ended the week down by 0.22%.


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