It was a relatively busy week on the economic calendar, in the week ending 13th March.
A total of 49 stats were monitored, following the 66 stats in the week prior.
Of the 49 stats, just 19 came in ahead forecasts, with 21 economic indicators coming up short of forecast. 9 stats were in line with forecasts in the week.
Looking at the numbers, 12 of the stats reflected an upward trend from previous figures. Of the remaining 37, 31 stats reflected a deterioration from previous.
For the Greenback, it was another particularly choppy week. The U.S Dollar Spot Index slumped to 94 levels on Tuesday before surging to 98 levels, delivering a 2.76% gain on the way. In the week prior, the Dollar Spot Index had fallen by 2.08%.
Economic data from the U.S took the back seat in the week, with the coronavirus and the U.S administration in focus.
Out of the U.S
It was a quiet first half of the week. The markets had to wait until Wednesday for February inflation figures, which were Dollar positive. In February, the core annual rate of inflation picked up from 2.3% to 2.4%, with core consumer prices rising by 0.2% in the month.
On Thursday, wholesale inflation figures delivered a mixed set of results, however. Core producer prices fell by 0.3%, with producer prices falling by 0.6% in February.
The numbers suggest that consumer spending remained resilient in February, while manufacturers had to drop prices.
At the end of the week, consumer expectations and sentiment figures also softened, reflecting sentiment towards the coronavirus. The numbers that are yet to reflect the spread of the virus in the U.S may well see more downside for April…
Much will now depend on consumer response to the U.S administration’s support and containment measures.
In the equity markets, the Dow slid by 10.36%, with the S&P500 and NASDAQ falling by 8.79% and by 8.17% respectively.
It was a particularly bearish week that saw the S&P trigger circuit breakers and enter into bearish territory.
Things could have been much worse, however, with Friday’s 9% gains across the majors limiting the downsides for the week.
Out of the UK
It was a busy week on the economic calendar.
Key stats included January GDP, industrial production and manufacturing production figures.
The numbers on Wednesday delivered more bad news, with the UK economy stalling at the start of the year. Trade figures were also negative.
Ahead of the numbers, however, the BoE cut interest rates by 50 basis points and delivered a range of other measures to counter the anticipated effects of the coronavirus on the UK economy.
The move was likely to be a coordinated one with the UK government, who announced its 1st budget hours later.
In spite of the government loosening the purse strings, a failure to roll out containment measures was an issue.
Expectations are that the BoE will also deliver further support that left the Pound on the back foot.
Coupled with capital outflows as carry trades unwind, the Pound fell to $1.22 levels for the 1st time since October.
In the week, the Pound slumped by a whopping 5.90% to $1.2278, with the FTSE100 ended the week down by 16.97%.
Out of the Eurozone
It was a relatively busy week economic data front.
At the start of the week, German industrial production and trade figures for January were in focus along with investor sentiment numbers for the Eurozone.
With the markets in a spin over the coronavirus, there was little to no influence from the numbers.
French non-farm payroll and the Eurozone’s finalized 4th quarter GDP numbers on Tuesday also had a muted impact.
At the start of the week, the EUR was on a tear, striking $1.14 levels on Monday before hitting reverse.
The reversal came in spite of the ECB holding interest and deposit rates unchanged on Thursday.
At the end of the week, finalized inflation figures also had a muted impact as the Dollar surged.
For the week, the EUR slid by 1.57% to end the week at $1.1107.
For the European major indexes, it was another bearish week. The DAX30 led the way down, sliding by 20.01%, with the CAC40 and EuroStoxx600 declining by 19.86% and 18.44% respectively.
Noteworthy in the week was the EuroStoxx600’s largest daily loss on record on Thursday.
Elsewhere
It was a particularly bearish week for the Aussie Dollar and the Kiwi Dollar.
In the week ending 13th March, the Aussie Dollar slumped by 6.53% to $0.6203, with the Kiwi Dollar down by 3.40% to $0.6134.
For the Aussie Dollar
It was a relatively quiet week for the Aussie Dollar on the economic data front.
Economic data was limited to February business confidence and March consumer confidence figures.
Both were Aussie Dollar negative, suggesting that the RBA may need to deliver more support.
The ongoing spread of the coronavirus and failure by some key governments to introduce stringent containment measures weighed on riskier assets.
Gold was on the slide in the week, as were other commodities, as the economic outlook darkened further.
For the Kiwi Dollar
It was also a relatively quiet week on the economic calendar.
Stats included February electronic card retail sales and Business PMI numbers. Both sets of numbers were positive, which limited the downside for the Kiwi Dollar in the week.
Consumers appeared to be undeterred by China’s lockdown, with card retail sales rising by 0.6%. In January, sales had fallen by 0.2%.
The Business PMI also impressed. Manufacturing sector activity was on the bounce, with the PMI up from 49.6 to 53.2… March numbers may tell a very different story, however.
On the monetary policy front, it remains to be seen whether the stats give the RBNZ some breathing room… With other central banks on the move, expectations are for another rate cut later this month, however.
The RBNZ monetary policy decision is on 25th March. Perhaps the bigger question going into next week is whether the RBNZ will deliver an out of cycle emergency rate cut…
For the Loonie
It was a quiet week on the economic calendar.
Economic data was limited to housing sector figures, which had a muted impact on the Loonie.
Tumbling crude oil prices and risk aversion weighed heavily on the Loonie in the week.
At the start of the week, crude oil prices were 30% in the red in response to a breakdown in talks between OPEC and Russia.
The Saudis cut April oil prices and promised a ramp-up in production in response.
A negative demand outlook, the ramp-up in production and a price war is certainly a bad cocktail for price stability.
Coupled with the spread of the coronavirus and uncertainty over what lies ahead, there was also further action from the BoC.
On Friday, the Bank of Canada lowered its overnight rate target to just 0.75%, effective 16th March. The move came in response to the sharp fall in oil prices and the negative impact of the coronavirus. On 4th March, the BoC had also cut rates by 50 basis points.
The Loonie fell by 2.89% to end the week at C$1.3806 against the Greenback.
For the Japanese Yen
It was a relatively quiet week on the data front.
In the 1st half of the week, finalized 4th quarter GDP numbers disappointed. The economy contracted by 1.8%, quarter-on-quarter, which was revised down from 1.6%. Year-on-year, the economy shrank by 7.1%, revised down from 6.3% contraction.
On Thursday, BSI Large Manufacturing Conditions for the 1st quarter were also negative. The Index fell from -7.8 to -17.2…
The numbers had a muted impact in a particularly choppy week for the Yen, however.
The Japanese Yen slid by 2.12% to end the week at ¥107.62 against the U.S Dollar. A 2.85% slide on Friday left the Yen in the red, as the Dollar bounced in response to the promise of U.S government support.
The Yen had visited ¥102 levels on Monday…
Out of China
It was a busy week on the economic data front.
Trade data from the weekend set the tone at the start of the week, with exports tumbling by 17.2%.
China’s U.S Dollar trade balance tumbled from a $47.21bn surplus to a $7.09bn deficit as a result. Imports fell by just 4% in February.
Mid-week, inflationary pressures also softened, with the annual rate of inflation easing from 5.4% to 5.2%.
On Wednesday, new loan figures were perhaps most alarming, with new loans coming in at CNY905.7bn. In January, there had been new loans of CNY3,340bn…
While the stats were skewed to the negative, news updates from China on the coronavirus were positive. The number of new cases continued to abate as did the number of deaths each day.
In the week ending 13th March, the Yuan rose by 0.30% to CNY7.0087 against the Greenback.
The CSI300 fell by 5.88%, while the Hang Seng tumbled by 8.08% in the week.
