The Weekly Wrap – Risk Aversion Swept the Markets, Delivering USD and

Out of the U.S

It was a shortened week, with stats on the lighter side.

Key stats were limited to weekly jobless claims and Philly FED Manufacturing numbers.

In the week ending 14^th January, initial jobless claims jumped from 231k to 286k.

On the positive, however, was a rise in the Philly FED Manufacturing Index from 15.4 to 23.2 in January.

Other stats that included housing sector and NY Empire State manufacturing numbers had a muted impact on the markets.

Market sentiment towards FED monetary policy drove U.S Treasury yields northwards, supporting Dollar demand.

Out of the UK

It was a particularly busy week.

Early in the week, claimant counts and the unemployment figures were upbeat. In December, claimant counts fell by 43.3k following a 95.1k slide in November. A continued rise in hiring supported a fall in the unemployment rate from 4.2% to 4.1% in November.

Mid-week, inflationary pressures picked up once more in December. The UK’s annual rate of inflation accelerated from 5.1% to 5.4% in December.

At the end of the week, retail sales figures were Pound negative, however.

In December, retail sales tumbled by 3.7%, reversing a 1.0% rise in November. Core retail sales slid by 3.6%, reversing a 0.7% increase in November.

In the week, the Pound fell by 0.89% to end the week at $1.3553. In the week prior, the Pound had risen by 0.64% to $1.3675.

The FTSE100 ended the week down by 0.65% partially reversing a 0.77% gain from the previous week.

Out of the Eurozone

ZEW Economic Sentiment figures from Germany and the Eurozone impressed early in the week. Germany’s ZEW Economic Sentiment jumped from 29.9 to 51.7 in January. The Eurozone ZEW Economic Sentiment Index rose from 26.8 to 49.4.

Through the week, finalized inflation figures for member states and the Eurozone were also in focus. There were no revisions from prelim figures, however, to influence. The Eurozone’s annual rate of inflation picked up from 4.9% to 5.0% in December.

A key stat that did draw interest, however, was German wholesale inflation. In December, Germany’s annual wholesale rate of inflation accelerated from 19.2% to 24.2%.

On the monetary policy front, the ECB monetary policy meeting minutes continued to reflect the transitory view on inflation.

For the week, the EUR fell by 0.59% to $1.1344. In the week prior, the EUR had risen by 0.44% to $1.1411.

The DAX30 slid by 1.76%, with the CAC40 and the EuroStoxx600 ending the week down by 1.04% and by 1.40% respectively.

For the Loonie

Inflation and retail sales were key stats from Canada.

In December, Canada’s annual core rate of inflation accelerated from 3.6% to 4.0%. The pickup in inflationary pressure supported the markets expectations on BoC monetary policy.

At the end of the week, retail sales for November failed to impress, however. Core retail sales rose by 1.1% month-on-month versus a forecasted 1.2% increase. Retail sales rose by 0.7% versus a forecasted 1.2% increase. In October, core retail sales had risen…