New COVID-19 spot reveals pandemic market recovery

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Statistics

It was a busier week on the economic calendar, in the week ending 26e November.

A total of 50 stats were monitored, down from 60 stats from the previous week.

Of the 50 statistics, 29 were ahead of forecast, with 17 economic indicators below expectations. There were 4 stats that were in line with the forecast for the week.

Looking at the numbers, 27 of the statistics reflected an upward trend compared to previous numbers. Of the remaining 23 statistics, all 23 reflect a deterioration from the previous one.

For the greenback, it was a 5e consecutive week in the green. The market reaction to the reappointment of Fed Chairman Powell and the increase in new cases of COVID-19 in Europe have met demand for dollars. A 0.73% drop on Friday, however, reversed the gains, as markets reacted to news of the new COVID-19 strain and containment measures. In the week ending 26e In November, the Dollar Spot Index rose 0.04% to 96.071. The previous week, the dollar had risen 0.95% to 96.031.

Outside the United States

At the start of the week, preliminary private sector PMIs were the focus of attention, with numbers skewed negative.

While the manufacturing PMI fell from 58.4 to 59.1, the all-important services PMI fell from 58.7 to 57.0. As a result, the composite PMI index fell from 58.7 to 57.0.

Ahead of the Thanksgiving holiday, a series of particularly busy numbers also garnered a lot of interest.

Personal spending rose 1.3%, with jobless claims rising from 270,000 to 199,000 in the week ending 19e November.

Orders for basic durable goods were also positive, up 0.5% in October, as inflationary pressures intensified.

The Fed’s preferred core PCE price index rose 4.1% year-on-year in October. In September, the index had risen 3.7%.

GDP figures for the 3e However, the quarter did not live up to estimates. In the 3e quarter, the economy grew 2.1%, below the expected 2.2%. The economy grew 6.7% in the previous quarter.

Outside the UK

It has been a relatively busy week, with preliminary private sector PMIs and industrial trend orders in focus.

The statistics were biased towards the positive, with the PMI of the most important services falling from 54.6 to 58.6. Manufacturing activity also picked up, with the PMI dropping from 54.1 to 57.7.

A marked increase in CBI’s industrial trend orders, which rose from 9 to 26 in November, was also positive.

COVID-19 woes weighed in, however, dampening the impact of positive numbers

During the week, the British pound fell 0.85% to end the week at $ 1.3337. Over the previous week, the British pound had risen 0.28% to $ 1.3451.

The FTSE100 ended the week down 2.49%, following a loss of 1.69% from the previous week.

Outside the euro zone

Earlier this week, consumer confidence and November’s preliminary private sector PMIs were at the center of concerns.

The rise in new COVID-19 cases has weighed on consumer morale, with the Eurozone consumer confidence index dropping from -4.8 to -6.8.

The private sector PMIs for November were positive, however.

A pick-up in service sector activity in France and Germany led to an increase in the euro area services PMI from 54.6 to 56.6. Activity in the French manufacturing sector also picked up, while that of Germany remained stable, supporting an increase in the euro zone’s composite PMI index from 54.2 to 55.8.

The rest of the numbers were biased towards the negative, however, with the German economy in the spotlight.

German business sentiment weakened in November, with the Ifo business climate index falling from 97.7 to 96.5.

It wasn’t much better for consumers. Consumer confidence took a hit, with the GfK consumer sentiment indicator for December falling from 1.0 to -1.6.

German GDP figures were also disappointing.

In the 3e quarter, the German economy grew 1.7% qoq, according to 2sd estimate the numbers. This is a drop from a preliminary 1.8% and a 2sd quarter 2.0%.

On the week, the euro rose 0.24% to $ 1.1317. The previous week, the euro had fallen 1.35% to $ 1.1290.

The DAX30 slipped 5.59%, with the CAC40 and EuroStoxx600 ending the week with losses of 5.24% and 4.53% respectively.

For the loonie

There were no important statistics to consider, leaving the loonie in the hands of market risk sentiment and crude oil prices.

In the week ending 26e In November, the loonie fell 1.19% to C $ 1.2791. During the previous week, the loonie had fallen 0.72% to C $ 1.2640.

Somewhere else

It was another bearish week for the Australian dollar and the Kiwi dollar.

The Australian dollar fell 1.55% to $ 0.7123, with the Kiwi dollar falling 2.60% to end the week at $ 0.6822.

For the Australian dollar

New private CAPEX and retail sales were the focus of attention.

In the 3e quarter, new private CAPEX fell 2.2% after increasing 4.4% in the previous quarter. Although negative for the quarter, the forecast for 2021/22 has been raised, limiting the damage.

Retail sales were also dynamic, supported by the reopening. Retail sales jumped 4.9% in October after increasing 1.3% in September.

However, the market reaction to the COVID-19 news over the weekend sent the Aussie down.

For the Kiwi Dollar

Retail sales and trade data have focused on the economic data front.

In the 3e quarter, retail sales were down 8.1% quarter-on-quarter, reversing a 3.3% increase from the previous quarter. The impact on the Kiwi was mitigated, however, with the slippage resulting from the last lockdown.

October trade data was optimistic, however. New Zealand’s trade deficit fell from NZ $ 2,206 million to NZ $ 1,286 million.

The numbers were not enough to prevent a reversal, however, as the RBNZ’s monetary policy wreaked havoc.

On Wednesday, the RBNZ raised spot rates 25bp to 0.75%. Market participants expected a bigger move, which ultimately led to the Kiwi dollar falling.

The decline in the Kiwi came despite the RBNZ statement stressing the need for continued policy tightening.

Ultimately, however, it was the news of the new COVID-19 strain that did the damage.

For the Japanese yen

Private sector PMIs and inflation were the center of attention, with statistics skewed in the positive.

In November, Japan’s manufacturing PMI fell from 53.2 to 54.2 and the services PMI from 50.7 to 52.1.

There was also a resumption of inflationary pressures. In November, Tokyo’s core annual inflation rate accelerated from 0.1% to 0.3%.

The statistics had a moderate impact on the yen, however, with the new strain of COVID-19 and government measures in Europe and beyond to prevent the demand for refuge from spreading.

The Japanese yen rose 0.54% to 113.38 yen against the US dollar. During the previous week, the yen had fallen 0.09% to 113.990.

Outside of china

There were no important statistics to guide the markets.

On the monetary policy front, the PBoC left the prime lending rates unchanged, which was in line with market expectations.

In the week ending 26e In November, the Chinese yuan fell 0.10% to CNY 6.3933. The previous week, the yuan had ended the week down 0.12% to 6.3871 CNY.

The CSI300 slipped 0.61% and the Hang Seng slipped 3.87%.

This article originally appeared on FX Empire

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