The Weekly Wrap – COVID-19, Fed Economic Data and Monetary Policy Delivered Choppy Week



Statistics

It has been a particularly busy week on the economic calendar, the week ending on the 7the January.

A total of 63 statistics were monitored, up from 15 the previous week.

Of the 63 statistics, 34 are ahead of expectations, with 23 economic indicators below expectations. There are 6 stats that were in line with the forecast for the week.

Looking at the numbers, 25 of the statistics reflect an upward trend compared to previous numbers. Of the 38 remaining statistics, 31 reflected a deterioration from the previous one.

For the greenback, he was back in the green. In the week ending 7the In January, the Dollar Spot Index rose 0.07% to 95.739. A 0.60% drop on Friday, however, limited the increase. The previous week, the Dollar Spot Index was down 0.36% to 95.670. While finding solid support in the more hawkish FOMC meeting minutes on Wednesday, the disappointing NFP numbers on Friday weighed in.

Outside the United States

Private sector PMIs and labor market statistics were central concerns ahead of Friday’s massive non-farm payrolls.

The statistics were negative, with private sector growth slowing. In December, the ISM manufacturing PMI fell from 61.1 to 58.7. More importantly, the ISM non-manufacturing PMI fell from 69.1 to 62.0.

Labor market statistics were also negative during the week. In November, JOLT’s vacancies stood at 10.562m, compared to 11.091m in October. Initial jobless claims rose from 200,000 to 207,000 in the week ending 31st December.

More significantly, however, was a modest 199k increase in nonfarm payrolls in December. Economists had forecast a hike of 400k. Markets were probably expecting more following an 800k increase in non-farm payrolls, according to the ADP. Despite this lower figure, the US unemployment rate fell from 4.2% to 3.9%.

On the monetary policy front, the minutes of the FOMC meeting were also in the spotlight in the middle of the week. US stock markets reacted negatively to more hawkish-than-expected minutes, boosting demand for the dollar. The minutes revealed that the Fed may need to raise rates sooner than previously anticipated.

Outside the UK

The private sector’s finalized PMIs were the focus of attention, with the pound’s statistics positive for the week. In December, the manufacturing PMI fell from 57.6 to 57.9 and the services PMI from 53.2 to 53.6. As a result, the composite PMI fell from 53.2 to 53.6. The 3 have been revised upwards from the preliminary figures.

During the week, the pound rose 0.41% to end the week at $ 1.3588. The week before, the pound had risen 1.09% to $ 1.3532.

The FTSE100 ended the week up 1.36% after gaining 0.17% from the previous week.

Outside the euro zone

The private sector PMIs for the euro area and member states, inflation and the German economy were the focus of attention.

Growth in the manufacturing sector remained relatively stable in December, while the service sector was affected.

The eurozone manufacturing PMI fell from 58.4 to 58.0, while the services PMI fell from 55.9 to 53.1. As a result, the Eurozone composite PMI index fell from 55.4 to a 9-month low of 53.3.

For Germany, retail sales, unemployment and industrial production figures were all positive for November. However, with the strong increase in Omicron business at the end of the year, the numbers had a relatively moderate impact on the euro. A sharp narrowing of Germany’s trade surplus has also failed to shake things up.

On the inflation front, however, preliminary figures indicated a further resumption of inflationary pressures in December.

While France’s annual inflation rate held steady at 2.8%, that of Germany fell from 5.2% to 5.3%. Italy’s annual inflation rate accelerated from 3.7% to 3.9%. As a result, the euro area’s annual inflation rate fell from 4.9% to 5.0%. The hike will likely put more pressure on the ECB to act, especially after the Fed’s shift in stance on interest rates.

On the week, the euro slipped 0.08% to $ 1.1361. The previous week, the euro had risen 0.45% to $ 1.1370.

EuroStoxx600 fell 0.40%, while the CAC40 and DAX30 ended the week up 0.91% and 0.40% respectively.

For the loonie

Business data, along with employment and Ivey PMI numbers were the center of attention. The stats were biased towards the positive for the Loonie.

In November, Canada’s trade surplus fell from C $ 2.26 billion to C $ 3.13 billion. Employment rose another 54.7k in December, following a jump of 153.7k in November. As a result, the unemployment rate in Canada fell from 6.0% to 5.9%.

The only negative point for the loonie was the sharp drop in the Ivey PMI from 61.2 to 45.0 in December.

Adding support to the loonie during the week was a rally in crude oil prices. WTI crude ended the week up 4.91% at $ 78.9 a barrel.

In the week ending 7the In January, the loonie slipped 0.05% to C $ 1.2643 against the greenback. During the previous week, the loonie had climbed 1.39% to reach C $ 1.2637.

Somewhere else

It has been a bearish week for the Australian dollar and the Kiwi dollar.

The Australian dollar slipped 1.13% to $ 0.7181, with the Kiwi dollar falling 0.69% to end the week at $ 0.6779.

For the Australian dollar

There were no major statistics to provide guidance.

For the Kiwi Dollar

It was also a quiet week for the Kiwi dollar, with no major statistics for the markets to consider.

For the Japanese yen

Finalized private sector PMIs, household spending and inflation were the main statistics for the week.

It was a mixed set of numbers, however. The very important PMI of the services sector fell from 53.0 to 52.1, with household spending also falling. In November, household spending fell 1.2% month-on-month.

Inflation figures were positive, however, with Tokyo’s core inflation rate falling from 0.3% to 0.5% in December.

The Japanese yen lost 0.42% to 115.560 yen against the US dollar. During the previous week, the yen had fallen 0.61% to ¥ 115,080.

Outside of china

It has been a relatively quiet week on the economic data front. Private sector PMIs have gained the upper hand.

In December, the Caixin Manufacturing PMI fell from 49.9 to 50.9, that of services dropping from 52.1 to 53.1.

In the week ending 7the In January, the Chinese yuan fell 0.34% to CNY 6.3778. The previous week, the yuan had ended the week up 0.18% to 6.3561 CNY.

The Hang Seng Index ended the week up 0.41%, while the CSI300 slipped 2.39%.

This article originally appeared on FX Empire

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