PA Market Report: Overview (Feb 1 – Feb 5) & Upcoming Events Feb’21

February 1: The week began with the upturn in the German manufacturing sector as it continued into Source: IHS Markit. the new year, with January PMI® survey data from IHS Markit showing further gains in output and new orders across the sector. On the other hand, the upturn in the UK manufacturing sector slowed sharply at the start of 2021. Output growth eased and new orders fell slightly as producers faced weaker inflows of new export work and temporary supply-chain disruptions caused by COVID-19 restrictions and transport delays (especially at ports) following the end of the Brexit transition period.

A ray of hope shines for the USA as January PMI data from IHS Markit indicated a robust improvement in the health of the U.S. manufacturing sector. Economic activity in the manufacturing sector grew in January, with the overall economy notching an eighth consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. RBA Governor Philip Lowe provided a statement where Monetary Policy Decisions are discussed. At its meeting that day, the Board decided to maintain the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility.

February 2: The chairman of “Swiss National Bank (SNB),

Thomas Jordan said that” We Estimate That Swiss GDP Will Decline Roughly 3% In 2020.” As Newzealand’s Labor Market Statistics got released, it provides a clear picture of the New Zealand labour market, including unemployment and employment rates, demand for labour, and changes in wages and salaries.

For example: In the December 2020 quarter, compared with the September 2020 quarter: • Unemployment rate fell to 4.9 percent. • Underutilisation rate fell to 11.9 percent. • Employment rate rose to 66.8 percent. • Average ordinary time hourly earnings rose to $34.14. In the year to the December 2020 quarter: • Wage rates increased 1.6 percent. • Filled jobs increased 0.9 percent. Thomas Jordan drops another bomb on the same day saying, there was a risk of upward pressure on $a if did not extend QE $AUD.

February 3: Optimism or jeopardy, you decide. IHS MARKIT / CIPS UK SERVICES PMI’s January data pointed to a steep and accelerated fall in UK service sector output, with the rate of decline the fastest recorded since May 2020. Survey respondents overwhelmingly linked lower activity to the impact of restrictions on trade and temporary business closures during the third national lockdown.

Despite a sharp downturn in client demand due to the coronavirus disease 2019 (COVID-19) pandemic, the latest survey indicated that business optimism improved for the third consecutive month. Euro area annual inflation is expected to be 0.9% in January 2021, up from -0.3% in December, according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in January (1.5%, compared with 1.3% in December), followed by services (1.4%, compared with 0.7% in December), non-energy industrial goods (1.4%, compared with -0.5% in December) and energy (-4.1%, compared with -6.9% in December).

Mario Draghi is called on to lead Italy’s government in crisis, the former central banker will need all the skills he honed saving the European currency. Fed’s Bullard sees ‘very strong’ U.S. economic growth as pandemic eases in 2021. Bullard’s bullish outlook suggests the U.S. unemployment rate could fall from the current 6.7% to as low as 4.8% “in the months ahead.” That is higher than the 3.5% seen before the pandemic, but less, Bullard noted, than the median of 5.6% in the period after World War II. 

February 4: Thursday saw U.S. Treasury Sec Yellen convened a meeting with the heads of the Securities and Exchange Commission, Federal Reserve Board, Federal Reserve Bank of New York, and Commodity Futures Trading Commission to discuss recent volatility in financial markets. The EURUSD barrier and 1.20 support gives way. The EURUSD barrier and 1.20 support gave away later that day. The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. 

February 5: RBA Governor Philip Lowe said, “The Board has no appetite to go into negative territory and has done as much as it reasonably can with interest rates.”So it’s over to fiscal policy – if the government is up to it.  The U.S. added 49,000 jobs in January vs. 50,000 expected. Job growth returned to the U.S. in January, with nonfarm payrolls increasing by 49,000 while the unemployment rate fell to 6.3%, the Labor Department said Friday in the first employment report of the Biden administration.

Economists surveyed by Dow Jones had been looking for growth of 50,000 and the unemployment to hold unchanged at 6.7%. As a consequence of it, we saw USDXXX pairs melting at the NY session of that day. Same fate for Canada as Statistics Canada says the economy lost almost 213,000 jobs in January as employment fell to the lowest level since August last year, wiping out the gains made in the fall.

The unemployment rate rose 0.6 percentage points to 9.4 percent, the highest rate since August. Financial data firm Refinitiv says the average economist estimate was for a loss of 47,500 jobs in January and an unemployment rate of 8.9 percent. The losses were almost entirely concentrated in Ontario and Quebec, and mostly in the retail sector as lockdowns and restrictions closed many businesses. BoE Gov. Andrew Bailey looks at how central banks are adapting to new types of shocks to the economy. And he focuses on how we use monetary policy to keep inflation under control.

He then talks about how central banks can act, whilst maintaining their reputation for independence. 

Upcoming News of Next week:

February 8: Inflation Expectations q/q

February 10: 

  • CPI m/m
  • Core CPI m/m
  • Crude Oil Inventories
  • BOE Gov Bailey Speaks
  • Fed Chair Powell Speaks

February 11

  • EU Economic Forecasts
  • Unemployment Claims

February 12:

  • Prelim GDP q/q
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