The Weekly Wrap – Economic Data, COVID-19, and Geopolitics Left the Markets Struggling

The Stats

It was a quieter week on the economic calendar, in the week ending 26^th June.

A total of 44 stats were monitored, following the 60 stats from the week prior.

Of the 44 stats, 29 came in ahead forecasts, with 13 economic indicators coming up short of forecast. 2 stats were in line with forecasts in the week.

Looking at the numbers, 33 of the stats reflected an upward trend from previous figures. Of the remaining 11, 8 stats reflected a deterioration from previous.

For the Greenback, it was a 1^st weekly loss in 3 weeks. In the week ending 26^th June, the Dollar Spot Index fell by 0.19% to 97.433. In the week prior, the Dollar had risen by 0.31%.

COVID-19 and geopolitical risk remained in focus, while economic data delivered support to riskier assets in the week.

For the U.S, the daily COVID-19 numbers pointed to a sharp rise in new coronavirus cases during the week.

As part of the U.S administration’s distraction tactics, Trump threatened the EU, including the UK, with fresh tariffs. This had come off the back of White House adviser Navarro spooking the markets earlier in the week. Navarro had said that the U.S – China trade agreement was over before then reversing the statement on the same day…

Looking at the latest coronavirus numbers.

The total number of coronavirus cases stood at 9,884,193 on Friday, rising from last Friday’s 8,757,734 total cases. Week-on-week, the total number of cases was up by 1,126,459 on a global basis. This was higher than the previous week’s increase of 1,039,054 in new cases.

In the U.S, the total rose by 250,686 to 2,547,876. In the week prior, the total number of new cases had risen by 181,871. An upward trend was evident throughout the week.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 8,019 to bring total infections to 729,345. In the previous week, the total number of new cases had risen by 7,481.

Out of the U.S

It was a relatively busy week on the economic data front. U.S stats made up more than half of the economic calendar in the week.

Key stats in the week included prelim June private sector PMIs, May core durable goods orders, and the weekly jobless claims.

On the positive, there was a less marked contraction in private sector, which was aligned with a global trend. The all-important services PMI rose from 37.5 to 46.7 in June.

In May, core durable goods orders rose by 4%, with durable goods orders surging by 15.8%. Both came in well ahead of forecasts.

Jobless claims figures disappointed, however, with a 1.48m rise coming in above a forecasted 1.3m increase.

At the end of the week, personal spending, inflation, and finalized consumer sentiment figures had a muted impact. COVID-19 updates overshadowed the stats on the day.

In the equity markets, the NASDAQ fell by 1.90%, with the Dow and S&P500 declining by 3.31% and 2.86% respectively.

Out of the UK

It was a relatively quiet week on the economic calendar. June CBI Industrial trend orders and prelim private sector PMIs were in focus.

The stats were skewed to the positive, with the UK’s service sector PMI jumping from 29.0 to 47.0.

More impressive, was a return to expansion for the UK’s manufacturing sector.

The upside for the Pound was limited, however, with Brexit, COVID-19, and the threat of U.S tariffs weighing.

In the week, the Pound fell by 0.11% to $1.2336, following a 1.52% slide in the previous week. The FTSE100 ended the week down by 2.12%.

Out of the Eurozone

It was a busy week on the economic data front.

Key stats included prelim June private sector PMIs for France, Germany, and the Eurozone. June and July business and consumer sentiment figures for Germany were also in focus.

The stats were skewed to the positive, with all the economic indicators seeing an improvement from the previous month.

France saw its private sector return to expansion in June, with both manufacturing and service PMIs rising to above 50.

Germany and the Eurozone saw a marked improvement, but not enough to break through to 50 levels. The Eurozone Composite PMI rose from 31.9 to 47.5.

German business and consumer confidence improved further at the turn of the quarter, providing the EUR with support.

Negative sentiment towards COVID-19 and the threat of tariffs limited the upside, however.

For the week, the EUR rose by 0.37% to $1.1219, following a 0.69% decline from the previous week.

For the European major indexes, it was a bearish week. The DAX30 and EuroStoxx600 fell by 1.96% and by 1.95%, with the CAC40 declining by 1.40%.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar. The gains ended a run of 2 consecutive weeks in the red.

In the week ending 26^th June, the Aussie Dollar rose by 0.44% to $0.6865, with the Kiwi Dollar rising by 0.25% to $0.6423.

For the Aussie Dollar

It was a quiet week for the Aussie Dollar on the economic data front.

There were no major stats to provide the Aussie dollar with direction. A lack of stats gave June’s prelim private sector PMIs a greater influence than normal…

Australia’s services PMI rose from 26.9 to 53.2, with the manufacturing PMI rising from 44 to 49.8.

The figures supported the RBA’s more optimistic outlook on economic recovery. A spike in new COVID-19 cases in the U.S and the threat of fresh tariffs on the EU were negative, however.

For the Kiwi Dollar

It was also a relatively quiet week on the economic data front.

Key stats were limited to May trade data that failed to support the Kiwi.

While the trade deficit narrowed in May, it was a 25.6% slid in imports, compared with May 2019 that led to the narrowing. Exports fell by 6.1%.

On the monetary policy front, the RBNZ delivered its June policy decision, standing pat on policy. There was talk of continued uncertainty, however, and the possible need for more support. In spite of this, there was no major influence on the Kiwi Dollar in the week.

For the Loonie

It was a particularly quiet week on the economic calendar. A lack of stats left the Loonie in the hands of COVID-19 and marker risk sentiment in general.

The Loonie fell by 0.60% to end the week at C$1.3688, following a 0.13% loss from the previous week.

For the Japanese Yen

It was a relatively quiet week on the data front.

June’s prelim private sector PMIs were in focus early in the week. The service sector saw conditions improve, with the PMI rising from 26.5 to 42.3. An easing of lockdown measures delivered support in June. It was a different story for the manufacturing sector, with the PMI falling from 38.4 to 37.8.

At the end of the week, Tokyo’s core annual rate of inflation held steady at 0.2%.

Ultimately, the stats had a muted impact on the yen, as market risk appetite continued to influence.

The Japanese Yen fell by 0.33% to end the week at ¥107.22. In the week prior, the Yen had risen by 0.47% against the U.S Dollar.

Out of China

There were no material stats to consider in the week. On the monetary policy front, the PBoC held loan prime rates unchanged at the start of the week.

A lack of stats left geopolitics and COVID-19 updates in focus.

Following news of China agreeing to ramp up imports of soybeans, ethanol, and corn, Navarro delivered uncertainty early in the week.

On Monday night, Navarro had stated that the U.S – China trade agreement was “Over.”

There’s no smoke without fire. While Navarro was quick to correct the statement, the coming weeks should prove interesting…

In the week ending 26^th June, the Yuan ended the week down by 0.10% CNY7.0782 against the Greenback.

The CSI300 rose by 0.98%, while the Hang Seng fell by 0.38%.