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The Weekly Wrap – It was a Busy Week, with Brexit News Sinking the Pound

Out of the U.S

It was a quieter week on the economic data front.

On Wednesday, JOLTs job openings for October were in focus. A pickup in job openings failed to drive demand for riskier assets, however.

In the 2nd half of the week, November inflation and jobless claims figures drew more attention.

While the annual rate of core inflation held steady at 1.6%, jobless claims spooked the markets on Thursday.

In the week ending 4th December, jobless claims jumped from 716k to 853k.

Wholesale inflation and December consumer sentiment figures wrapped up the week.

The focus was on consumer sentiment, with the Michigan Consumer Sentiment Index rising from 76.9 to 81.4 in December.

With the market focus on Brexit and Capitol Hill, however, the figures had a muted impact on market risk sentiment.

In the equity markets, the S&P500 fell by 0.96%, with the Dow and the NASDAQ ending the week down by 0.57% and by 0.69% respectively.

Out of the UK

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

Key stats included industrial and manufacturing production and GDP figures for October.

It was a mixed bag on the data front. While industrial and manufacturing production impressed, GDP figures were skewed to the negative.

In October, the economy grew by just 0.4%, following a 1.1% expansion in September. The 3-month rolling GDP came in at 10.2%, easing back from 15.5% in September.

NIESR GDP numbers also disappointed, with the NIESR GDP Estimate coming in at 1.5%, down from a previous 10.3%.

While the stats influenced, Brexit remained the key driver in the week. The Pound hit reverse as a result of a lack of progress, with Johnson and Ursula von der Leyen agreeing to a Sunday deadline.

In the week, the Pound slid by 1.61% to $1.3224. In the week prior, the Pound had risen by 0.98% to $1.3441.

The FTSE100 ended the week down by 0.05%, following on from a 2.87% gain in the previous week.

Out of the Eurozone

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

In the 1st half of the week, industrial production figures for Germany and ZEW Economic Sentiment figures for Germany and the Eurozone were in focus.

The stats were skewed to the positive. Industrial production jumped by 3.2%, with sentiment also improving.

Germany’s ZEW Economic Sentiment Index rose from 39.0 to 55.0, with the Eurozone’s rising from 32.8 to 54.4.

Progress towards a COVID-19 vaccine led to a marked improvement in sentiment.

In the second half of the week, German trade data and finalized inflation figures from Spain and Germany had a muted impact, however.

On the monetary policy front, the ECB weighed on the European majors, with downward revisions to growth for next year. In response to the gloomier outlook, the ECB increased the PEPP by €500bn.

For the week, the EUR slipped by 0.07% to $1.2112. In the week prior, the EUR had rallied by 1.32% to $1.2121.

For the European major indexes, it was a bearish week. The CAC40 slid by 1.81%, with the DAX30 and the EuroStoxx600 falling by 1.39 % and by 0.99% respectively.

For the Loonie

It was a quiet week on the economic data front. Ivey PMI numbers for November were the only stats for the markets to consider ahead of Wednesday’s BoC policy decision.

The PMI fell from 54.5 to 52.7 in November, weighing on the Loonie at the start of the week.

On Wednesday, the BoC left monetary policy unchanged, which was in line with market expectations.

The Bank of Canada pledged to keep rates unchanged until economic slack is absorbed so that the 2% inflation target is sustainably achieved. Based on October’s projections, this is not expected to happen until 2023.

With no plans to deliver further easing and progress towards a COVID-19 vaccine, the Loonie found support in the week.

In the week ending 11th December, the Loonie rose by 0.12% to C$1.2769. In the week prior, the Loonie had rallied by 1.58% to C$1.2784.

Elsewhere

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

In the week ending 11th December, the Aussie Dollar rallied by 1.45% to $0.7533, with the Kiwi Dollar rising by 0.51% to end the week at $0.7084.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats included business and consumer confidence figures for November and December respectively.

The stats were skewed to the positive, with business confidence and consumer confidence on the rise.

Alongside progress towards a COVID-19 vaccine, the pickup in confidence drove demand for the Aussie Dollar.

For the Kiwi Dollar

It was a quiet week on the economic calendar.

Key stats included November electronic retail sales and Business PMI numbers.

It was a mixed bag. While retail sales rose by just 0.1%, the business PMI jumped from 51.7 to 55.3, reflecting improving economic conditions.

From elsewhere, economic data from China and progress towards a COVID-19 vaccine delivered support for the Kiwi Dollar in the week.

For the Japanese Yen

It was a relatively busy week on the economic calendar.

October household spending and finalized 3rd quarter GDP numbers were in focus in the 1st half of the week.

The stats were skewed to the positive, with spending rising by 2.1% in October following a 3.8% rise in September. Year-on-year, spending rose by 1.9%, following a 10.2% slump in September.

GDP numbers were also skewed to the positive. Year-on-year, the economy grew by 22.9%, revised up from a prelim 21.4%. Quarter-on-quarter, the economy expanded by 5%, which was in line with prelim.

BSI Large Manufacturing Conditions also impressed, rising from 0.1 to 21.6 in the 4th quarter.

While the stats were largely positive, COVID-19 vaccine news pegged the Yen back in the week.

The Japanese Yen rose by 0.12% to ¥104.04 against the U.S Dollar. In the week prior, the Yen had fallen by 0.08% to ¥104.17.

Out of China

It was a relatively busy week on the economic data front, with November trade and inflation figures in focus.

Exports jumped by 21.1% in November, following an 11.4% increase in October. Imports rose by a more modest 4.5%, following a 4.7% increase in October. As a result, the U.S Dollar trade surplus widened from $58.44bn to $75.42bn.

Inflation figures were on the disappointing side, however. Consumer prices fell by 0.5% in November, reversing a 0.5% increase in October. Month-on-month, consumer prices slid by 0.6%, following a 0.3% decline in October.

Wholesale deflationary pressures eased, however, with the producer price index falling by 1.5%. The producer price index had fallen by 2.1% in October.

In the week ending 11th December, the Chinese Yuan fell by 0.23% to CNY6.5463. In the week prior, the Yuan had risen by 0.71% to CNY6.5316.

The CSI300 slid by 3.48%, with the Hang Seng ended the week down by 1.23%.


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