The Weekly Wrap – Disappointing Economic Data Offset By Market Optimism

The Stats

It was a relatively quiet week on the economic calendar, in the week ending 12th February.

A total of 33 stats were monitored, following 70 stats from the week prior.

Of the 33 stats, 12 came in ahead forecasts, with 18 economic indicators coming up short of forecasts. There were just 3 stats that were in line with forecasts in the week.

Looking at the numbers, 15 of the stats reflected an upward trend from previous figures. Of the remaining 18 stats, 17 reflected a deterioration from previous.

For the Greenback, it was back into the red after two consecutive weekly gains, marking just the 2nd weekly loss in 6-weeks. The Dollar Spot Index fell by 0.62% to $90.480. In the previous week, the Dollar had risen 0.46% to 91.004.

Out of the U.S

It was a quiet week on the economic data front.

In the 1st half of the week, December JOLTs job openings and January inflation figures were in focus.

While job openings were on the rise in December, inflationary pressures softened in January.

The annual core rate of inflation eased from 1.6% to 1.4%, with core consumer prices holding steady in the month of January.

In the 2nd half of the week, the jobless claims and consumer sentiment figures were in focus.

Initial jobless claims fell back from 812k to 793k in the week ending 5th February. While lower, the figure was still high by historical standards stressing the need for further fiscal support.

At the end of the week, consumer sentiment slid from 79.0 to 76.2 according to prelim February numbers. Consumer expectations also took a hit, with the index declining from 74.0 to 69.8. Economists had forecast for both expectations and sentiment to pick up in February.

On the monetary policy front, FED Chair Powell delivered more assurances for the markets in the week. Overnight on Wednesday, the FED Chair reiterated that rates will stay low for a while, highlighting labor market conditions.

In the equity markets, the NASDAQ rose by 1.73%, with the Dow and the S&P500 seeing gains of 1.00% and 1.23% respectively.

Out of the UK

It was a relatively busy week on the economic data front, though the markets had to wait until Friday for the key numbers.

Ahead of Fridays stats, January retail sales and house price figures were in focus.

The BRC Retail Sales Monitor increased by 7.1% in January, year-on-year. This was up from a 4.8% increase in December.

In the 4-weeks to January 31st, however, sales fell by 1.3%.

House price data was also gloomy, with the RICS House Price Balance coming in at just 50% in January. In December, the balance had stood at 63%.

At the end of the week, key stats included 4th quarter GDP and industrial and manufacturing production figures.

In December, manufacturing production increased by 0.3%, following a 1.1% rise in November. Industrial production rose by a modest 0.2%, following a 0.3% increase in November. Both fell short of forecasts.

4th quarter GDP numbers beat market expectations, however.

Year-on-year, the economy contracted by 7.8%, following an 8.7% contraction in the 3rd quarter.

Quarter-on-quarter, the economy expanded by 1.0%, following the 3rd quarters 16.1% rebound.

Other stats included 4th quarter business investment and December trade figures that had limited impact on the Pound.

In the week, the Pound gained 0.83% to end the week at $1.3849. In the week prior, the Pound had risen by 0.20% to $1.3735.

The FTSE100 ended the week up by 1.55%, following a 1.28% gain from the previous week.

Out of the Eurozone

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

December industrial production figures for Germany, France, and Italy were in focus.

The stats were skewed to the negative, pressuring the EUR in the 1st half of the week.

While production stalled in Germany, both France and Italy recorded unexpected declines in production.

Other stats included finalized January inflation figures for Germany and Spain and German trade data.

The stats were market positive, with Germanys trade balance coming in ahead of forecasts. Inflation figures also provided support, with inflationary pressures building at the start of the year.

For the week, the EUR rose by 0.61% to $1.2120. In the week prior, the EUR had fallen by 0.74% to $1.2046.

For the European major indexes, it was a mixed week, following the previous weeks rebound. The CAC40 and the EuroStoxx600 rose by 0.78% and by 1.09% respectively, while the slipped by 0.05%.

For the Loonie

It was a particularly quiet week, with economic data limited to wholesale sales figures for December.

Fridays stats had a muted impact on the Loonie, however, with rising crude oil prices delivering Loonie support.

In the week ending 5th February, the Loonie rose by 0.47% to C$1.2696. In the week prior, the Loonie had increased by 0.16% to C$1.2756.

Elsewhere

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

In the week ending 12th February, the Aussie Dollar rallied by 1.08% to $0.7761, with the Kiwi Dollar ended the week up by 0.35% to $0.7223.

For the Aussie Dollar

It was a relatively quiet week.

Key stats included business confidence figures for January and consumer confidence figures for February.

Both sets of numbers remain key and both were skewed to the positive, supporting the rise in the Aussie.

In January, the NAB Business Confidence Index increased from 4.0 to 10.0. The Westpac Consumer Sentiment index rose by 1.9%, partially reversing a 4.5% slide from January.

With both business investment and consumer spending key to a continued economic recovery, the numbers should provide some comfort to the RBA.

For the Kiwi Dollar

It was a relatively quiet week.

Electronic card retail sales and business PMI numbers were in focus.

It was a mixed bag for the Kiwi. While card retail sales continued to decline in January, the Business PMI showed a bounce back in private sector activity.

Reversing a fall from 55.3 to 48.7 in December, the PMI bounced back to 57.5, providing some Kiwi support late in the week.

For the Japanese Yen

It was a quiet week.

There were no material stats to consider ahead of next weeks 4th quarter GDP numbers.

The Japanese Yen rose by 0.43% to ¥104.94 against the U.S Dollar. In the week prior, the Yen had declined by 0.68% to ¥105.39.

Out of China

It was a relatively quiet week on the data front.

January inflation figures were in focus in a shortened week.

The stats were skewed to the negative, with deflationary pressures returning at the start of the year.

Year-on-year, consumer prices fell by 0.3%, reversing a 0.2% rise from December. Month-on-month, however, consumer prices rose by 1.0%, following a 0.7% gain in December.

Also easing the pain was a 0.3% rise in the producer price index, partially reversing a 0.4% decline from December.

In the week ending 12th February, the Chinese Yuan rose by 0.12% to CNY6.4582. In the week prior, the Yuan had fallen by 0.58% to CNY6.4658.

The CSI300 rallied by 5.91%, with the Hang Seng ended the week up by 3.02%.