Weekly Market Review - September 9-13
This week, Japanese Yen has been the worst performer among forex majors, as investors’ attention turned to riskier assets. USD/JPY rose 1.08% for the week. The British pound was the best performer, gaining 1.82% against the US dollar, as fears of a no-deal Brexit eased and the economy beat expectations.
In the commodity market, Brent and WTI crude oil fell 2.26% and 2.97% respectively. Gold and silver lost over 1.2% each amid hopes that the US and China will reach trade agreements at least temporarily.
In the crypto market, Bitcoin fell 1.3% for the week, showing little volatility, as the markets expect the launch of the futures trading platform from Bakkt.
British Economy Beat Forecasts
The UK’s growth in the gross domestic product (GDP) beat expectations in July, easing fears that the economy is sliding to its first recession since the 2008 financial crisis. On Monday, the Office for National Statistics (ONS) said that the GDP rose 0.3% in July from June, which was the biggest growth figure since January. Analysts surveyed by Reuters pointed to a 0.1% increase. Judging by the GDP performance, it is likely that a technical recession will be avoided. The pound found support in the GDP report, moving up against the euro and the US dollar.
US Jobless Claims to Lowest Level Since May
The number of US citizens applying for unemployment benefits declined to the lowest level in five months last week ended September 7, pointing to a strong labour market despite weak job growth. On Thursday, the Labor Department said that initial claims for unemployment benefits fell 15,000 to a seasonally adjusted 204,000. Analysts polled by Reuters expected a reading at 215,000 for last week. Previous week data was revised upward to demonstrate 2,000 more applications. The four-week moving average fell 4,250 to 212,500.
US Core CPI Surged in August
US core inflation showed a significant boost in August, hitting the biggest gain in a year. However, the increase in the core consumer prices index (CPI) won’t stop the Fed cutting interest rates next week to push the slowing economy. On Thursday, the Labor Department said that the core CPI, which excludes food and energy prices, rose 0.3% for the third month in a row. The indicator was driven by increasing healthcare costs and prices for airline tickets and used cars. Year-on-year, the core CPI increased by 2.4%. Economists expected the indicator to gain 0.2% in August and 2.3% in annual terms.
Eurozone Production Down Again
Eurozone production declined for the second month in a row. Eurostat said that industrial output in the 19 countries sharing the euro fell 0.4% in July from June and by 2.0% compared to July 2018. Analysts expected moderate declines of 0.1% in monthly terms and 1.3% year-on-year. June data was revised upward to show a 1.4% monthly drop instead of a 1.6% decline. The worst performer in the July reading was production of non-durable consumer goods like packaged food and clothing, which fell 0.8%.
UK Wages Highest in 11 Years
British workers received the biggest wages in over 11 years in the three months to July, with the unemployment rate declining again to the lowest levels since the 1970s. The improving labour market figures come despite the UK’s Brexit crisis. Nevertheless, exit deadline is getting closer, which puts pressure on some employers. The ONS said that total growth in earnings plus bonuses expanded by 4.0% year-on-year in the three months to July, which is the biggest surge since 2008 and exceeds analyst expectations.
German Exports Surprise Economists
German exports increased in July, suggesting an excellent start to the third quarter and possible avoidance of an economic recession. On Monday, the Federal Statistics Office said that exports rose 0.7% in July, while imports declined by 1.5%. Thus, the trade surplus increased to 20.2 billion euro after 18.0 billion euro in June. Economists surveyed by Reuters anticipated a 0.5% decline in exports and a 0.3% fall in imports. The better-than-expected export reading is like a breath of fresh air after a series of weak data from Europe’s largest economy.
Upcoming News to Watch
On Monday, markets in Japan will be closed in observance of a national holiday known as Respect for the Aged Day. Meanwhile, the Reserve Bank of Australia will present its meeting minutes.
On Tuesday, the US will release data on industrial production while Japan will report on its exports, imports, and trade balance.
Wednesday will be an exciting day for the Forex markets, as the Fed’s Federal Open Market Committee (FOMC) will meet to decide its interest rate and present the economic outlook. Analysts expect the Fed to cut the rate again. The Bank of Japan will also announce its interest rate decision. Elsewhere, the UK, eurozone, Canada will publish inflation data.
The Bank of England will decide its interest rate on Thursday.
The week will end with inflation data from Canada.
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. Learn more.