The Weekly Wrap – Russia, economic data and China’s lockdown were in focus


Statistics

It’s been a busier week on the economic calendar for the week ending 01-April 2022.

A total of 64 stats were monitored, following 43 stats the previous week.

Of the 64 statistics, 30 are ahead of forecasts, with 29 economic indicators below forecasts. 5 stats were in line with the forecast for the week.

Looking at the numbers, 31 of the stats reflected an upward trend from previous numbers. Of the remaining 33 statistics, 29 reflected a deterioration from previous figures.

A shift in sentiment towards BoE and ECB monetary policy pegged the greenback, while US data and Russia’s continued invasion of Ukraine continued to provide support for the dollar.

Outside the United States

It was a busier week on the economic calendar. Earlier in the week, consumer confidence and JOLT job openings sparked interest. Consumer confidence improved in March as JOLT job openings came in better than expected.

Mid-week, ADP’s non-farm payrolls and fourth-quarter GDP numbers failed to support the market. The release of the statistics coincided with a change in sentiment towards Russia and Ukraine reaching a ceasefire agreement.

According to the ADP, non-farm payrolls increased by 455,000 in March, compared to 486,000 in February. The US economy also grew at a slower pace than expected.

The market’s focus then shifted to Thursday, with inflation, personal spending and jobless claims attracting investor interest.

A further increase in inflationary pressures supported Fed Chairman Powell’s more hawkish stance on monetary policy.

While personal spending was weak, nonfarm payrolls grew at a decent pace in March.

In March, non-farm payrolls increased by 431,000, following an increase of 750,000 in February. The March numbers tested the appetite for riskier assets, with markets seeing 431k good enough for a more aggressive FED rate path.

During the week ending April 1, 2022, the Dollar Spot Index fell 0.16% to end the week at 98.632. The previous week, the index rose 0.57% to 98.789.

Outside the UK

Fourth quarter GDP and the final manufacturing PMI figures were in focus. Better than expected GDP figures limited the decline of the pound.

In the fourth quarter, the UK economy grew 1.3% quarter on quarter, up from the first estimate of 0.90%. However, activity in the manufacturing sector slowed in March. The PMI fell from 58.0 to 55.2, down from 55.5 at the start.

Better than expected GDP figures for the quarter supported the market’s bet for a rate hike through November, which limited the damage.

During the week, the Grind fell 0.52% to end the week at $1.3114. Over the previous week, the pound rose 0.03% to $1.3182.

The FTSE100 ended the week up 0.73%, after gaining 1.06% from the previous week.

Outside the euro area

In the middle of the week, the German economy was under the spotlight. While the statistics were skewed towards the negative, the impact on European majors was modest. With Russia’s invasion of Ukraine, investors anticipate a short-term impact on economic activity.

In April, Germany’s GfK consumer sentiment indicator fell from -8.5 to -15.5, as retail sales rose just 0.3% in February.

Unemployment figures were also disappointing, with a drop of 18,000 unemployment leaving the jobless rate at 5.0%.

On Friday, the manufacturing PMI figures for March also failed to impress.

In March, the Spanish manufacturing PMI fell from 56.9 to 54.2, with the Italian PMI dropping from 58.3 to 55.8. Economists had forecast PMIs of 55.5 and 57.0, respectively.

The French manufacturing PMI fell from 57.2 to 54.7, down from a preliminary of 54.8. Germany’s PMI rose to 56.9 from 58.4, down from 57.6 at the start.

For the Eurozone, the manufacturing PMI fell from 58.2 to a 14-month low of 56.6, from a preliminary reading of 57.0.

Other statistics for the week included final inflation figures for member states and consumer spending figures for the eurozone and France. These statistics received little attention, with the German economy and survey data taking center stage.

For the week, the USD rose 0.55% to $1.1043. The previous week, the euro fell 0.62% to $1.0983.

The CAC40 rose 1.99%, with the EuroStoxx600 and DAX ending the week with gains of 1.06% and 0.98%, respectively.

For the loon

It was another quiet week on the economic data front. The statistics were limited to GDP figures for January. As expected, the economy grew 0.2% during the month, after growing 0.1% in December.

Although positive, a downward trend in crude oil prices weighed on the loonie.

During the week ending April 1, the Loonie fell 0.36 to C$1.2522 against the greenback. Over the previous week, the Loonie rose 1.00% to C$1.2477.

Elsewhere

It was a bearish week for the Australian dollar and the kiwi dollar.

The Australian dollar slipped 0.25% to $0.7496, with the Kiwi dollar falling 0.65% to end the week at $0.6927.

For the Australian dollar

At the start of the week, the February retail sales figures were on the right track. Sales rose 1.8% after rising 1.8% in January. At the end of the week, private sector credit and manufacturing data were also positive for the Australian dollar.

In February, credit to the private sector increased by 0.6%, with the AIG manufacturing index rising from 53.2 to 55.7.

However, the numbers weren’t good enough to deliver another bullish week. A pullback in commodity prices, market sentiment toward the Fed’s monetary policy and China’s COVID-19 woes weighed.

For the kiwi dollar

Business confidence improved slightly in March. The ANZ Business Confidence Index fell from -51.8 to -41.9. However, the numbers were not good enough to support the Kiwi Dollar.

Weak private sector PMI figures in China and China’s latest lockdown measures weighed.

For the Japanese yen

Retail sales and industrial production disappointed mid-week. In February, retail sales fell 0.8% after rising 1.1% in January year-on-year.

Industrial production rose just 0.1%, partially reversing a 0.8% decline from January.

Figures based on the Tankan survey for the first quarter also failed to impress.

CAPEX for all major industries rose 2.2%, below a forecast increase of 4.0%.

During the quarter, the outlook index of large manufacturing companies, the index of large manufacturing companies and the index of large non-manufacturing companies also retreated from fourth quarter levels.

the japanese yen fell 0.39% to end the week at ¥122.52 against the dollar. The previous week, the yen ended the week down 2.42% at ¥122.05.

Outside of China

Private sector PMIs for March have been of interest this week.

The NBS manufacturing PMI fell from 50.2 to 49.5, with the non-manufacturing PMI dropping from 51.6 to 48.4.

More importantly, the Caixin Manufacturing PMI slipped from 50.4 to 48.1. New containment measures to curb the spread of COVID-19 weighed on activity in the manufacturing sector.

During the week ending April 1, the Chinese yuan rose 0.05% to CNY 6.3629. In the previous week, the yuan ended the week down 0.08% at CNY 6.3662.

The Hang Seng index ended the week up 2.97%, with the CSI300 gaining 2.43%.

This article was originally published on FX Empire

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