🚨 Priority Economic Data for the Week Ahead | Analytics with Qluster Research
Enhance your outlook with the brand new Economic Data schedule for the week starting Monday the 29th of November 2021 🔥 Read on to see Q's wrap up of last week's data 👇
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US Fed Chair Jerome Powell reappointed, Markets respond to new Omicron COVID-19 variant
As the market enters a brand new weekly trading session, Q notes that last week was the fifth consecutive week in the green for the US dollar off the back of rising coronavirus cases in Europe and US Federal Reserve Chairman Jerome Powell's reappointment.
With the breaking news of the new COVID-19 'omicron' strain and corresponding containment measures, a 0.73% slide on Friday reversed gains as the market responded.
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Manufacturing figures early in the week showed a negative skew on preliminary private sector PMIs. Although the manufacturing PMI (Purchasing Managers Index) revealed an uptick from 58.4 to 59.1, the preeminent Services PMI declined from 58.7 to 57.0 - resulting in the Composite Index falling from 57.6 to 56.5.
In the week of Thanksgiving, US GDP figures fell short of Q3 expectations (2.2%), showing an expansion of 2.1%. This decline marks a fall from 6.7& in Quarter 2.
However, consumption appears on the rebound as the US Fed's preferred core PCE (Personal Consumption Expenditures) index outlined a 4.1% year-on-year rise from September's 3.7%. In addition, core durable goods orders returned positive at a 0.5% increase in October, while personal spending revealed a similar upbeat rise of 1.3% - adding fuel to speculation of persistent inflationary pressures.
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The Pound
Early in the week ending November 26th, preliminary private sector PMIs and industrial orders snatched the limelight.
Data releases show numbers leaning positive. The Services PMI jumped from 54.6 to 58.6, while a lively manufacturing sector resulted in the PMI increasing from 9 to 26 last month.
Despite the resoundingly optimistic economic data, COVID-19 concerns appear to have muted the market's reaction. At the session close, the Pound fell by 0.85% to US$1.3337 - walking back the previous week's 0.28% gain at US$1.3451.
The Footsie (FTSE100) concluded the week down by 2.49%, continuing the previous week's 1.69% loss.
The Eurozone
Across the English Channel, consumer confidence and preliminary private sector PMIs for November drew focus early in the week. With resurgent coronavirus cases, the Eurozone consumer confidence index fell from -4.8 to -6.8.
German business sentiment subsided last month as the Ifo Business Climate Index declined from 97.7 to 96.5. Similarly, consumer sentiment waned further following a drop in the Gfk Consumer Climate Indicator for December from 1.0 to minus 1.6.
Throwing fuel to the fire, German GDP figures for Q3 show a disappointing expansion of 1.7% compared to expectations set by a preliminary figure of 1.8% and previous Q2 GDP growth of 2.0%.
On the other hand, PMIs in the private sector illustrate a more affirmative position.
A material ramp-up in French and German service sector activity led the Eurozone's services PMI to 56.6, up from the previous value of 54.6. As German manufacturing sector activity stayed relatively steadfast, an increase in France supported an increase from 54.2 to 55.8 in the Eurozone Composite PMI.
At the weekly session close, the EUR rose by 0.24% to US$1.1317 - which is a slight recovery from the previous week's slump of 1.35% to US$1.1290.
Meanwhile, the major European indices slid to the downside by the week's end. The DAX40, CAC40, and EuroStoxx600 each fell by 5.59%, 5.24% and 4.53% respectively.
The Loonie
In the face of a relatively quiet week on the economic data front, the whims of market risk sentiment and crude oil prices appear to dictate Canadian dollar price action.
As such, the Loonie exacerbated the previous week's losses of 0.72% to C$1.2460 by falling an extra 1.19% to C$1.2791.
The Yen
While private-sector PMIs snagged the lion's share of attention, inflation numbers were also in focus - with the figures leaning positive.
According to official data, Japan's manufacturing PMI rose in November from 53.2 to 54.2. Services PMI recorded a leap up from 50.7 to 52.1. In addition, price rises appear to accelerate as Tokyo's core annual inflation rate showed a jump from 0.1% to 0.3% in November.
However, with the new strain variant of COVID-19 making headlines and official health measures in Europe and beyond, the positive economic data had a muted effect on demand for the safe-haven currency.
In the week ending November 26th, the Yen rose against the US dollar by 0.54% to ¥113.38 and pares back the following last week's fall of 0.09% to ¥113.990.
The Yuan
With no substantial figures to guide market direction, the attention shifted to monetary policy from the PBoC (People's Bank of China). On this front, the central bank's loan prime rates are unchanged at 3.85% and aligned with market expectations.
As a result, the Yuan fell by 0.10% against the US dollar to CNY6.63933. Previously, the Yuan had dropped by 0.12% to CNY6.3871.
Chinese equities also saw losses, with the CSI300 slipping by 0.61% and the Hang Seng declining by 3.87%.
The Oceanic
In local news, bears appear to have had a firm grip on last week's price action for the Aussie dollar and Kiwi dollar. This command over downside pressure increased with news of the new COVID-19 variant breaking late in the week.
The private new CAPEX and retail sales figures took centre-stage Down Under.
After a previous rise of 4.4% in Q2, the private new CAPEX fell by 2.2% in Quarter 3. However, raised forecasts for 2021/22 appear to have offset and limited the fallout from the pessimistic numbers.
With the economic reopening well underway, upbeat retail sales figures delivered support in October - with the latest data showing a jump of 4.9% from September's rise of 1.3%.
Across the strait, retail sales and trade data were in focus for the Kiwi dollar.
Quarterly retail sales figures showed a slump of 8.1% in Q3, completely reversing a 3.3% rise from Q2. The acute decline is attributed to the latest lockdown, softening the blow to the national currency.
However, despite upbeat trade data showing a narrowing trade deficit from NZ$2,206m to NZ$1,286m, the figures were impotent in checking a reversal likely caused by shifts in monetary policy from the Reserve Bank of New Zealand (RBNZ).
The RBNZ lifted cash rates by 25 basis points to 0.75% on Wednesday. However, as the market expected a more substantial move, the latest policy change eventually led to a slide in the NZD. Further confusing market participants, the apparent Kiwi dollar weakness eventuated even though officials at the NZ central bank highlighted the need for a continued tightening of policy.
Ultimately, the latest news of the COVID-19 'Omicron' variant remains the likeliest culprit for prevailing bearish action. As such, the AUD declined by 1.55% to US$0.7123 while the NZD dropped by 2.60% to US$0.6822.
Now, moving to the new week ahead...
The reappointment of US Fed Chair Powell by President Biden marks a preference for maintaining consistency in approach to the US post-pandemic economic recovery - and managing concerns of persistent upside pressure on prices.
Notwithstanding the anticipated Non-Farm Payrolls due on Friday, key US employment and production figures are likely to offer a sense of direction in the foreign exchange and asset markets.
However, Qluster analysts expect uncertainty and price volatility while the market digests and formulates a response to the new Omicron coronavirus variant.
Regarding this week's developments in the crypto space, make sure to tune in again for tonight's edition of the Technical Outlook.
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What are your thoughts on this week's economic data? Let the Qluster Research team know and leave a comment below 👇
See you for the next update.
- q
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