The Weekly Wrap – Economic data and central bank chatter influenced during the week
Outside the United States
The main statistics for the week included consumer confidence, jobless claims and major durable goods orders.
Statistics were mixed heading into a busier Friday.
Consumer confidence weakened slightly in May, with 2nd estimate the GDP figures for the 1st quarter aligned with first estimates.
On the plus side, however, there was a drop in weekly jobless claims from 444k to 406k.
Another 1.0% increase in basic durable goods orders, following a 3.2% jump in March, was also positive.
At the end of the week, the focus was on inflation, personal spending and consumer sentiment.
In May, personal spending rose a more modest 0.5% after jumping 4.7% in April.
Inflationary pressures were on the rise, however, with the Core PCE price index increasing 0.7% in April. In March, the index had risen 0.4%.
Year over year, the index jumped 3.1% from the 2.9% forecast. In April, the index was up 1.9% year-over-year.
Final consumer sentiment figures confirmed a drop from April.
In May, Michigan’s consumer sentiment index fell from 88.3 to 82.9, from 82.8 at the start.
On the monetary policy front, chatter from FOMC members confirmed comments in the minutes of a willingness to consider a reduction in the asset purchase program.
In equity markets, the NASDAQ rose 2.06%, with the Dow and the S & P500 posting gains of 0.94% and 1.16% respectively.
Outside the UK
It has been a particularly quiet week with no major statistics to give direction to the pound in the week.
A lack of statistics has left the pound in the hands of the UK government’s ongoing reopening plans and optimistic economic prospects.
During the week, the pound rose 0.27% to end the week at $ 1.4188. In the previous week, the pound had risen 0.38% to $ 1.4150.
The FTSE100 ended the week up 0.06%, after falling 0.36% from the previous week.
Outside the euro zone
At the start of the week, the German economy was at the center of the concerns.
In the 1st quarter, the German economy contracted more than expected. Quarter over quarter, the economy contracted 1.8%, revised down from 1.7%. Year over year, the economy contracted 3.3%, which was revised down after a preliminary contraction of 3.3%.
However, the effects of the downward revisions were offset by improved consumer and business confidence.
The IFO business climate index fell from 96.6 to 99.2, with the GfK consumer climate falling from -8.6 to -7.0.
At the end of the week, the French economy was at the center of concerns.
In the 1st quarter, the French economy contracted 0.1% quarter on quarter, revised down from a preliminary expansion of 0.4%. In the 4e quarter, the economy contracted 1.5%.
Household spending was also disappointing. In April 2021, consumer spending fell 8.3%, month over month, from an expected increase of 0.4%. Consumer spending fell 0.3% in March.
Inflationary pressures were on the rise, however. According to preliminary figures, the annual inflation rate fell from 1.2% to 1.4% in May. On a monthly basis, consumer prices were up 0.3%, following a 0.1% increase in April.
For the week, the euro rose 0.08% to $ 1.2192. The previous week, the euro had risen 0.34% to $ 1.2182.
The DAX30 rose 0.53%, with the CAC40 and EuroStoxx600 ending the week up 1.53% and 1.02% respectively.
For the loonie
It was a particularly quiet week. There were no major stats to provide direction for the Loonie this week.
A lack of statistics has left the loonie in the hands of crude oil stocks and market risk sentiment.
Rising crude oil prices provided support to prevent a reversal of the previous week’s gain.
In the week ending 28e In May, the loonie slipped 0.08% to C $ 1.2076. During the previous week, the loonie had risen 0.31% to settle at C $ 1.2066.
It has been a mixed week for the Australian dollar and the Kiwi dollar.
In the week ending 28e In May, the Australian dollar fell 0.26% to $ 0.7712, while the Kiwi dollar ended the week up 1.06% to $ 0.7250.
For the Australian dollar
It was a quiet week.
Construction work carried out and new private CAPEX for the 1st quarter were in focus.
The statistics were biased in the positive but were not good enough to prevent a fall into the red on Friday.
Construction work performed increased 2.4%, reversing a 0.9% decline from 4e quarter of last year.
Credit to the private sector jumped 6.3% after rising 3.0% in the 4e quarter of last year.
For the kiwi dollar
It was a busy week.
At the start of the week, 1st the retail sales figures for the quarter impressed. Quarter over quarter, retail sales increased 2.5%, core retail sales 3.2%. In the 4e quarterly, retail sales and core retail sales fell 2.7% and 2.9%, respectively.
By midweek, however, trade data showed mixed results.
On a month-to-month basis, the trade surplus widened from NZ $ 39 million to NZ $ 388 million. On a year-over-year basis, however, the surplus fell from NZ $ 1,700 million to NZ $ 730 million.
With the RBNZ in action on Wednesday, trade data had a moderate impact on the Kiwi.
The more belligerent-than-expected monetary policy outlook gave the Kiwi an advantage.
The RBNZ rate statement revealed that the spot rate could be on the rise as early as the last quarter of 2022.
For the Japanese yen
It was a quieter week.
The markets had to wait until Friday for the inflation figures.
In May, Tokyo’s core annual inflation rate remained stable at -0.2%, which was in line with expectations.
On a monthly basis, consumer prices excluding food and energy were unchanged after falling 0.4% in April.
The statistics however had a moderate impact on the Japanese yen, which was under pressure this week.
The Japanese yen fell 0.82% to ¥ 109.85 against the US dollar. The previous week, the yen had risen 0.36% to ¥ 108.96.
Outside of china
It has been a particularly quiet week on the data front.
There were no major statistics to influence the market’s risk appetite during the week.
In the week ending 28e In May, the Chinese yuan rose 1.02% to CNY 6.3685. The week before, the yuan had fallen 0.05% to 6.4340 CNY.
The CSI300 rebounded 3.64%, with the Hang Seng ending the week up 2.34%.