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Weekly Wrap – Brexit, Monetary Policy and Trade Drove the Majors

September 14
11:04 2019

The Pound ended the week up by 1.77% to $ 1.2501, following on from a 1.04% rise from the previous week.

For the FTSE100, a 1.17% gain came in spite of the stronger Pound, marking a 3rd consecutive week in the green.

Out of the Eurozone

It was yet another particularly busy week on the economic data front.

On Monday, July trade data impressed, with Germany’s trade surplus widening from €18.1bn to €20.2bn.

The markets then had to wait until Friday for the next positive stat, with the Eurozone’s trade surplus widening from €20.6bn to €24.8bn. From the Eurozone, wage growth held steady at 2.7% in the 2nd quarter, which would have also been considered positive.

Through the week, finalized August inflation figures out of Germany, France, and Spain had a muted impact on the EUR.

July industrial production figures out of France and Italy provided little support. While production rose by 0.3% in France, following a 2.3% slide in June, production in Italy fell 0.7%. In June, production had fallen by 0.3%.

For the EUR, the main event of the week was the ECB monetary policy decision on Thursday, however. The ECB cut the deposit rate from 0.4% to 0.5%, whilst also reintroducing the asset purchasing program.

For the week, the EUR rose by 0.4% to $ 1.1073, supported by improved sentiment towards Brexit and easing fears of a global recession.

For the European major indexes, it was a 4th consecutive week in the green. The DAX30 led the way, rallying by 2.27%. The CAC40 and EuroStoxx600 saw more modest gains of 0.92% and 1.2% respectively.

Elsewhere

It was a mixed week for the Aussie and Kiwi Dollars following previous week gains.

The Aussie Dollar rose by 0.48% to $ 0.6879, while the Kiwi Dollar fell by 0.48% to $ 0.6377.

For the Aussie Dollar

It was a relatively quiet week, with the Aussie Dollar finding little support from the stats.

At the start of the week, July home loans provided some support, with loans rising by 5%, following a 0.9% fall in June. Housing sector conditions are a key consideration for the RBA, which continues to see uncertainty in household spending.

Negative, however, was a deterioration in both business and consumer confidence.

On Tuesday, the NAB Business Confidence Index fell from 4 to 1 in August. On Wednesday, the Westpac Consumer Sentiment Index fell by 1.7% in September, partially reversing a 3.6% rise in August.

While the stats were skewed to the negative, improved sentiment towards the U.S – China trade war provided the upside.

For the Kiwi Dollar

August electronic card retail sales and August’s Business PMI figures provided direction in the week. While both sets of numbers were Kiwi Dollar positive, the Business PMI came in at 48.4, which continued to pressure Kiwi Dollar.

On the positive, card retail sales jumped by 1.1%, according to figures released at the start of the week.

For the Loonie

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

Stats were limited to housing sector data, which had a muted impact on the Loonie.

Following the BoC hold on policy, sliding oil prices through the week weighed.

The Loonie ended the week down 0.87% to C$ 1.3288 against the Greenback.

For the Japanese Yen

It was a mixed week on the economic data front.

On Monday, 2nd estimate GDP numbers came in softer, with the economy growing by 0.3% in the 2nd quarter. The 1st estimate had come in at 0.4%.

On Wednesday, the BSI Large Manufacturing Conditions Index recovered from -10.4 to -0.2 in the 3rd quarter, which was positive.

Finalized industrial production figures on Friday had a muted impact, with production rising by 1.3%, which was in line with prelim.

While the stats were skewed to the negative, it was an easing in geopolitical risk that did the damage.

For the week, the Japanese Yen fell by 1.09% to ¥108.09.

Out of China

It was a quiet week on the data front. August inflation figures released on Tuesday had a muted impact on the markets

While the annual rate of inflation held steady at 2.8%, the annual rate of wholesale inflation eased to 0.8% from 0.3% in July.

In spite of the disappointing numbers, a material shift in both the U.S and China’s stance on trade eased market tensions.

The Yuan rose by 0.53% to CNY7.0787 against the Greenback.

This article was originally posted on FX Empire

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