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Weekly Market Review - August 12-16
Euro was the worst performer of the week among Forex majors as a top official at the European Central Bank (ECB) told the press that the ECB would force aggressive stimulus soon. New Zealand Dollar was also bearish, driven by the economic outlook of the Reserve Bank of New Zealand.
The British pound was the strongest currency this week, also because of an unexpected increase in UK retail sales.
The US dollar benefited from the dovish mood of other currencies and came as the second strongest currency.
In the cryptocurrency market, Bitcoin slashed last week’s rally and broke below the $10,000 level for the first time this month.
Macroeconomic News
Germany’s Economy Shows Worst Performance Since 2013
Germany’s GDP fell 0.1% in the second quarter amid the ongoing Sino-US trade war. On Wednesday, the country’s statistics office Destatis released its preliminary figures on economic growth. Thus, the pace of the annual growth of Germany’s GDP contracted to zero, the worst result in over six years. Nonetheless, GDP still accelerated by 0.4% when adjusted for the lower number of working days in 2019. Germany’s economic performance in the second quarter was in line with analysts’ expectations.
Eurozone’s GDP Slightly up
The eurozone’s economy slightly increased in the second quarter of this year, according to Eurostat. The EU’s statistics office said on Wednesday that the 19 economies in the block lost momentum while Germany’s GDP contracted amid trade tensions and Brexit uncertainty. Eurozone’s GDP growth was 0.2% last quarter compared to the first quarter, when the growth rate was 0.4%. The performance was in line with analysts’ forecasts. Eurozone’s industrial production fell 1.6% in June while employment growth slowed to 0.2% in the second quarter.
British Retail Sales Unexpectedly Increase
The UK’s retail sales surprisingly increased last month, fueled by the highest growth in online spending since 2016. Thus, consumers continue to help the British economy ahead of Brexit deadline on October 31. On Thursday, the Office for National Statistics (ONS) said that retail sales rose 0.2% in July after June’s growth of 0.9%. Analysts surveyed by Reuters actually expected a decline by 0.2%. Retail sales rose 3.3% year-on-year, slowing for June’s growth of 3.8%.
US Jobless Claims Rose More Than Anticipated
The number of US citizens applying for unemployment benefits rose above expectations last week. However, the general trend still points to a stable labour market. On Thursday, the Labor Department said that initial jobless claims added 9,000 for the week ended August 10, to a seasonally adjusted 220,000. Data for the previous week was revised upward to reflect 2,000 more claims than initially reported. Analysts polled by Reuters expected an increase in initial unemployment applications to 214,000. The four-week moving average rose 1,000 to 213,750 last week.
US Retail Sales Driven by Consumers
US retail sales jumped last month as households bought several categories of goods even though they spent less on cars. On Thursday, the Commerce Department announced that retail sales surged 0.7% in July, while economists expected an increase by 0.3%. June data was revised downward to reflect a 0.3% gain instead of 0.4% as initially reported. Year-on-year, retail sales rose 3.4%. Core retail sales, which exclude cars, gasoline, food services, and building materials, rose 1.0% last month compared to June.
US Business Investors Show no Change in June
US business inventories were flat in June as stocks at retailers declined more than anticipated. On Thursday, the Commerce Department said that businesses inventories had shown no dynamic in June after a 0.3% growth in May. Analysts surveyed by Reuters expected inventories to increase by 0.1% in June. The indicator is a key component of the GDP. Retail and auto inventories fell 0.3% and 0.5% over the month, respectively, rather than dipping 0.1% and 0.3% as initially reported.
Upcoming News to Watch
Next week, investors will keep an eye on the G7 summit, which will be held in France starting from Sunday.
Besides, several important economic indicators are expected to be released. Thus, on Monday, the eurozone will publish its inflation data, including both the consumer price index (CPI) and core CPI.
South Africa and Canada will also report on their inflation data on Wednesday.
The US Fed and the European Central Bank (ECB) will release the minutes of their July meetings on Wednesday and Thursday, respectively.
On Friday, Canada will publish retail sales data while the US will report on its new home sales.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.
