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The Weekly Wrap – Upbeat COVID-19 Vaccine News Left the Dollar in the Red

Out of the U.S

Finalized 3rd quarter GDP and consumer confidence figures for December were upbeat mid-week. The U.S economy grew by 2.3% in the 3rd quarter, which was up from a prelim 2.1%. In spite of a shift in FED monetary policy, rising consumer prices, and Omicron, consumer confidence improved in December.

The CB Consumer Confidence Index climbed from 111.9 to 115.8.

On Thursday, jobless claims, personal spending, core durable goods orders, and inflation figures were also in focus.

In the week ending 17th December, initial jobless claims held steady at 205k. Personal spending rose by 0.6%, with core durable goods up 0.8%.

The FED’s preferred inflation measure was also aligned with the FED’s shift in stance on inflation. In November, the core PCE price index rose by 4.7%, which was up from 4.2% in October.

Out of the UK

It was a quiet week, with CBI Industrial Trend Orders and GDP numbers in focus. Industrial trend orders slipped from 26 to 24. GDP numbers were mixed, however.

Quarter-on-quarter, the economy expanded by 1.1%, which was down from a prelim 1.3%. Year-on-year, however, the economy grew by 6.8% according to finalized figures. This was up from a prelim 6.6%.

Ultimately, the stats had a muted impact on the Pound, with risk appetite supporting the Pound in the week.

In the week, the Pound rose by 1.06% to end the week at $1.3386 In the week prior, the Pound had fallen by 0.21% to $1.3245.

The FTSE100 ended the week up by 1.41% reversing a 0.30% loss from the previous week.

Out of the Eurozone

Consumer confidence figures for Germany and the Eurozone were the key stats of the week. The numbers were EUR negative, with inflation and COVID-19 containment measures weighing. Impact on the EUR was limited, however, with the markets expecting consumer confidence to wane.

Germany’s GfK Consumer Climate Index for January fell from -1.6 to -6.8. The Eurozone’s Flash consumer confidence index fell from -6.8 to -8.3 for December.

For the week, the EUR rose by 0.70% to $1.1319. In the week prior, the EUR had fallen by 0.65% to $1.1240.

The CAC40 rallied by 2.31%, with the DAX30 and the EuroStoxx600 ending the week with up by 1.45% and by 1.82% respectively.

For the Loonie

Retail sales and GDP numbers were in focus. The numbers were Loonie positive.

In October, core retail sales rose by 1.3%, with retail sales up by 1.6%. Both had been in decline in September.

Month-on-month, Canada’s economy expanded by 0.8% in October, picking up from 0.2% growth in September.

While the stats were positive, rising crude oil prices and positive market risk sentiment also contributed to the upside.

In the week ending 24th December, the Loonie rose by 0.57% to C$1.2815 against the Greenback. In the week prior, the Loonie had fallen by 1.31% to C$1.2889.

Elsewhere

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

The Aussie Dollar rallied by 1.35% to $0.7221, with the Kiwi Dollar gaining 1.17% to end the week at $0.6818.

For the Aussie Dollar

Economic data was limited to private sector credit figures for November, which had a muted impact on the Aussie Dollar.

The RBA meeting minutes drew plenty of interest early in the week, however, delivering Aussie Dollar support. A more optimistic outlook on the economic recovery delivered support.

For the Kiwi Dollar

Economic data was mixed in the week. Consumer sentiment deteriorated in the 4th quarter. The Westpac Consumer Sentiment Index fell from 102.7 to 99.1.

In November, New Zealand’s trade deficit narrowed from NZ$1,302m to NZ$864m. Year-on-year, the deficit widened from NZ$4,900m to NZ$6,040m.

According to NZ Stats,

Compared with November 2020,

  • Goods exports rose NZ$668m (13%) to NZ$5.9bn.
  • Goods imports rose NZ$1.8bn (37%) to NZ$6.7bn.

For the Japanese Yen

Inflation was back in focus, though the numbers had a muted impact on the markets on Friday.

Japan’s annual core rate of inflation picked up from 0.1% to 0.5%. Economists had forecast an uptick to 0.4%. The annual rate of inflation accelerated from 0.1% to 0.6%.

The Japanese Yen fell by 0.58% to ¥114.380 against the U.S Dollar. In the week prior, the Yen had fallen by 0.25% to ¥113.720.

Out of China

It was a quiet week on the economic data front. There were no major stats to consider.

While there were no stats, the PBoC lowered the 1-year LPR by 5 bps to 3.8%. The markets had expected rates to be left unchanged.

In the week ending 24th December, the Chinese Yuan rose by 0.12% to CNY6.3677. In the week prior, the Yuan had ended the week declined by 0.08% to CNY6.3754.

The Hang Seng Index ended the week flat, while the CSI300 fell by 0.67%.


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