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The Weekly Wrap – U.S Nonfarm Payrolls and the Greenback Steal the Show

Out of the U.S

Key stats in the week included private sector PMI figures for July and labor market data.

While the ISM Manufacturing PMI fell from 60.6 to 59.6, the Non-Manufacturing PMI jumped from 60.1 to 64.1.

The marked increase in the non-manufacturing PMI raised the prospects of a sooner rather than later move by the FED.

Labor market figures mid-week tempered a Dollar surge, however.

According to the ADP, nonfarm payrolls increased by just 330k in July, falling well short of a forecasted 715k rise.

Weekly jobless claims fell from 399k to 385k in the week ending 30th July.

The key numbers of the week, however, were the July nonfarm payroll figures on Friday.

In July, the U.S added 943k jobs, with nonfarm payrolls having risen by an upwardly revised 938k in June. As a result of the marked increase, the unemployment rate fell from 5.9% to 5.4%.

Out of the UK

It was a relatively quiet week on the economic data front. Finalized private sector PMIs were in focus in the week.

Finalized manufacturing and service sector PMI figures affirmed softer private sector growth in July.

The only positive was an upward revision to the services PMI. In July, the services PMI fell from 62.4 to 59.6, which was up from a prelim 57.8.

Of greater significance in the week, however, was the BoE monetary policy decision.

In line with expectations, the BoE left policy unchanged, with no dissent from the hawks.

For the Pound, the BoE intimated a likely tightening over the next 12-months, which was not enough to deliver $1.40 levels.

In the week, the Pound fell by 0.23% to end the week at $1.3872. In the week prior, the Pound had risen by 1.13% to $1.3904.

The FTSE100 ended the week up by 1.29%, following a 0.07% gain from the previous week.

Out of the Eurozone

Private sector PMIs and the German economy were in focus.

While the private sector PMIs were mixed in the week, the Eurozone’s composite PMI rose from 59.2 to a 15-year high 60.2. This was down from a prelim 60.6%, however.

Non-survey-based stats from Germany in the week were also skewed to the positive.

The numbers were aligned with Germany’s private sector PMI figures that saw Germany rise to the top of the euro bloc PMI table.

In June, retail sales jumped by 4.2%, with factory orders up 4.1%, month-on-month.

Industrial production was negative, however, with production down 1.3% in June. Following a 0.8% fall in May, economists had forecast a 0.5% rise in spite of factory orders having fallen in May.

From the ECB, the Economic Bulletin was also in focus. While the Bulletin talked of a strong economic rebound, with stronger growth to come, the ECB did talk of downside risks stemming from the Delta variant.

The ECB also continued to reiterate its unwavering support on the monetary policy front.

For the week, the EUR fell by 0.91% to $1.1762. In the week prior, the EUR had risen by 0.84% to $1.1870.

The CAC40 rallied by 3.09%, with the DAX30 and the EuroStoxx600 ending the week up by 1.40% and by 1.78% respectively.

For the Loonie

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

Manufacturing PMI and trade data drew attention of ahead of employment and Ivey PMI numbers on Friday.

The stats were mixed. While manufacturing sector growth slowed, Canada saw its trade balance rise from a C$1.58bn deficit to a C$3.23bn surplus.

Employment figures were also upbeat, with the unemployment rate falling from 7.8% to 7.5%. Following a 230.7k increase in employment in June, employment rose by 94k in July. Full employment reversed a 33.2k fall from June, rising by 83k.

Following the fall in the manufacturing PMI, however, the Ivey PMI slid from 71.9 to 56.4.

In the week ending 6th August, the Loonie fell by 0.63% to C$1.2554. In the week prior, the Loonie had risen by 0.71% to C$1.2475.

Elsewhere

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

The Aussie Dollar rose by 0.16% to $0.7356, with the Kiwi Dollar ending the week up by 0.52% to $0.7010.

For the Aussie Dollar

Manufacturing sector data at the start of the week disappointed. In July, the AIG Manufacturing PMI fell from 63.2 to 60.8.

Housing sector data also failed to impress. Building permits slid by 6.7%, with home loans falling by 2.5%.

Things were not much better on the consumption front, with retail sales falling 1.8%, which was in line with prelim figures. Sales had risen by just 0.4% in the month prior.

On the positive, however, were trade figures, with Australia’s trade surplus widening from A$9.681bn to A$10.496bn in June. The increase came off the back of a large rise in exports than imports in the month.

While the stats were of influence, the RBA was also in action early in the week.

In line with market expectations, the RBA left monetary policy unchanged. There were no major surprises in the Rate Statement to provide the Aussie Dollar with direction,

At the end of the week, the RBA also released its quarterly Statement on Monetary Policy.

While acknowledging that the economy was recovering faster than expected, the RBA noted that the recent Delta variant outbreaks are interrupting the recovery. The statement highlighted that the near-term outlook remained highly uncertain and dependent upon health outcomes.

The RBA also expects the economy to contract in the 3rd quarter and for unemployment to rise for a time as a result of lockdown measures.

For the Kiwi Dollar

It was a quiet week, with employment figures the key numbers for the week.

The numbers were Kiwi positive, with employment rising by 1% in the 2nd quarter of this year. As a result of the increase, New Zealand’s unemployment rate fell from 4.7% to 4.0%.

For the Japanese Yen

It was a quiet week. Finalized private sector PMIs for July were in focus.

Upward revisions from prelim numbers were of little consequence, however.

The Manufacturing PMI rose from 52.4 to 53.0 in July, up from a prelim 52.2. For the services sector, the PMI fell from 48.0 to 47.4, which was up from a prelim 46.4.

The Japanese Yen fell by 0.48% to ¥110.25 against the U.S Dollar. In the week prior, the Yen had risen by 0.75% to ¥109.72.

Out of China

It was also a quiet week on the economic data front, with economic data limited to private sector PMIs.

It was a mixed set of numbers from China. While manufacturing sector growth slowed, service sector activity accelerated in July.

The Caixin Manufacturing PMI fell from 51.3 to 50.3, while the Services PMI rose from 50.3 to 54.9.

In the week ending 6th August, the Chinese Yuan fell by 0.34% to CNY6.4831. In the week prior, the Yuan had ended the week up by 0.31% to CNY6.4614.

The CSI300 and the Hang Seng ended the week up by 2.29% and by 0.84% respectively.


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