Out of the U.S
Inflation figures drove support for the Greenback early in the week.
The annual rate of inflation accelerated from 5.0% to 5.4% in June, with the core annual rate of inflation picking up from 3.8% to 4.5%.
Wholesale inflationary pressures were also on the rise, with the producer price index increasing by 1.0% in June. In May, the index had risen by 0.7%.
In the 2nd half of the week, jobless claims, retail sales, and consumer sentiment were in focus.
It was a mixed set of numbers for the Dollar.
In the week ending 9th July, initial jobless claims fell from 386k to 360k.
Retail sales beat forecasts, with sales up 0.6% month-on-month. Economists had forecast a 0.5% decline following a 1.7% slide in May. Year-on-year, sales was up 18%, coming in ahead of a forecasted 14.0% increase. In May, retail sales had risen by 27.6% year-on-year.
While the jobless claims and retail sales figures were positive, consumer sentiment waned in July.
According to prelim figures, the Michigan Consumer Sentiment Index fell from 85.5 to 80.8. Economists had forecast a rise to 86.0.
Manufacturing sector data from Philly and NY State, industrial production, and business inventories were also out but had a muted impact on the markets.
On the monetary policy front, FED Chair Powell delivered 2 days of testimony to lawmakers. Powell talked of the FED’s willingness to let inflation run hotter in order to avoid the mistake of tightening policy too soon. The FED Chair’s assurances had limited impact on the Greenback, however.
In the equity markets, the NASDAQ slid by 1.87%, with the Dow and the S&P500 ending the week down by 0.52% and by 0.97% respectively.
Out of the UK
It was busier week. Mid-week, inflation figures delivered Pound support, with the UK’s annual rate of inflation picking up from 2.1% to 2.5%.
On Thursday, employment figures were also positive for the Pound.
In June, claimant counts slid by 114.8k, following a 92.6k decline in May.
The unemployment rate saw an increase from 4.7% to 4.8% in May, though this is likely to fall back following the June claim figures.
While the stats were positive for the Pound, uncertainty over the impact of the Delta variant on the economy lingered.
In the week, the Pound fell by 0.96% to end the week at $1.3767. In the week prior, the Pound had risen by 0.56% to $1.3901.
The FTSE100 ended the week down by 1.60%, following a 0.02% loss from the previous week.
Out of the Eurozone
It was another busy week.
Industrial production and trade data for the Eurozone were in focus along with finalized inflation figures for June.
For the Eurozone, industrial production fell by 1.0%, reversing a 0.6% rise from April.
In June, the Eurozone’s trade surplus narrowed from €10.9bn to €7.5bn. Economists had forecast a widening to €16.4bn.
Following a shift in the ECB’s policy on price stability, however, the inflation figures had limited impact.
The Eurozone’s annual rate of inflation softened from 2.0% to 1.9%, falling below the ECB’s new 2% target rate.
The core annual rate of inflation softened from 1.0% to 0.9%.
For the week, the EUR fell by 0.59% to $1.1806. In the week prior, the EUR had risen by 0.09% to $1.1876.
The CAC40 fell by 1.06%, with the DAX30 and the EuroStoxx600 ending the week down by 0.94% and by 0.64% respectively.
For the Loonie
Monetary policy was the main area of focus in the week.
While holding monetary policy unchanged on Wednesday, the BoC revised down growth forecasts, weighing on the Loonie. The BoC revised its 2021 growth forecast down from 6.5% to 6.0%. While revised down for 2021, the BoC revised its growth forecast for 2022 up from 3.7% to 4.6%.
In spite of the downward revision to this year’s growth forecast, the BoC announced that it would reduce its weekly bond purchases from $3bn to $2bn, citing a strengthening in the economic recovery…
Stats in the week included manufacturing sales, ADP employment change, and wholesale sales figures.
While having limited impact on the Loonie, the stats were skewed to the negative.
Also weighing on the Loonie were falling crude oil prices in the week.
In the week ending 16th July, the Loonie slid by 1.33% to C$1.2613. In the week prior, the Loonie had fallen by 1.01% to C$1.2447.
In the week ending 16th July, the Aussie Dollar slid by 1.16% to $0.0.7401, while the Kiwi Dollar rose by 0.19% to $0.6999.
For the Aussie Dollar
It was a busier week, with consumer confidence and employment figures in focus.
The stats were skewed to the positive, though had a limited impact on the Aussie Dollar.
In July, the Westpac Consumer Confidence Index rose by 1.5% to $108.8. The survey was carried out before the rollout measures announced on 9th July.
Employment figures also impressed, with a 51.6k jump in full employment following a 97.5k increase in May. As a result of the further increase in hiring, the unemployment rate fell from 5.1% to 4.9% in June.
While the stats were positive for the Aussie Dollar, new COVID-19 restrictions weighed on the Aussie in the week.
For the Kiwi Dollar
It was a busy week.
Early in the week, electronic card retail sales and business confidence figures delivered mixed results.
In June, card retail spending increased by a further 0.9%, following a 1.7% rise in May.
Business confidence waned, however, with the NAB Business Confidence Index falling from 20.0 to 11.0.
By contrast, economic data in the 2nd half of the week impressed.
In June, the Business PMI rose from 58.6 to 60.7, with inflation accelerating in the 2nd quarter.
The annual rate of inflation accelerated from 1.5% to 3.3%, with consume prices up 1.3% in the quarter.
While the stats influenced, the RBNZ monetary policy decision on Wednesday was key.
Catching the markets off-guard, the RBNZ agreed to end the additional asset purchases under the LSAP programme by 23rd July.
For the Japanese Yen
It was another relatively busy week.
Early in the week, machinery orders provided some comfort, with orders up 7.8% in May.
Industrial production figures disappointed, however, with production falling by 6.5% in May.
Tertiary industry figures were also week, with the index falling by 2.7% in May.
At the end of the week, the Bank of Japan was also in focus but failed to deliver any surprises.
The Japanese Yen rose by 0.06% to ¥110.07 against the U.S Dollar. In the week prior, the Yen had risen by 0.82% to ¥110.140.
Out of China
It was a big week on the economic data front.
Early in the week, trade data for June was in focus ahead of 2nd quarter GDP numbers on Thursday.
While trade data impressed, with exports up 32.2%, GDP numbers disappointed in the week.
Year-on-year, the Chinese economy expanded by 7.9%, which was down from 18.3% in the 1st quarter. Quarter-on-quarter, the economy expanded by 1.3%, which was up from 0.6% growth in the 1st quarter, however.
Other stats at the end of the week included fixed asset investment, industrial production, and retail sales data.
The full set of numbers were softer in June than back in May, adding further pressure on riskier assets.
In the week ending 16th July, the Chinese Yuan ended the week flat at CNY6.4792. In the week prior, the Yuan had fallen by 0.09% to CNY6.4790.
The CSI300 and the Hang Seng ended the week up by 0.50% and by 2.41% respectively.