Dollar Softens but Stocks Take a Step Back ahead of U.S. Data

November 17, 2020

The dollar overnight lost 0.5% against sterling and the Chinese yuan, 0.3% relative to the yen, 0.2% versus the euro, Swiss franc and loonie, and 0.1% vis-a-vis the Australian dollar.

Share prices had closed down 0.2% in China and South Korea and are currently down 1.2% in the U.K. and Spain, 0.4% in Germany and  0.3% in France. Not all Asian stocks were down; the Japanese and Indian markets advanced 0.4% and 0.7%. The Japanese Nikkei close above 26,000 for the first time since the second quarter of 1991. U.S.  S&P and DJIA futures are lower, while Nasdaq futures are trading somewhat higher.

U.K./EU trade negotiations go on with mixed messages to the public regarding whether any progress toward a post-Brexit framework is being made.

Not much data were released overseas, but investors will shortly learn about a bunch of U.S. indicators, including retail sales, industrial production, import prices and the National Association of Home Builders housing index.

Ten year British gilt and U.S. Treasury yields are a basis point softer. The price of West Texas Intermediate crude oil slipped 0.4%. Gold is little changed.

New U.S. Covid-19 cases totaled 166.6k yesterday and appear headed for a somewhat greater advance today. The daily death count, however, slipped under 800. Several states have tightened restrictions against activities that require social gather. Mask wearing compliance continues to be well under 100% and divided largely by political preference.

U.S. President Trump still has not conceded the November 3 election and appears bent on damaging anything that might be useful to an  incoming Biden Administration.

After slamming into Nicaragua, Hurricane Iota has been downgraded to a Category 2 storm.

Following a string of days in which the Peoples Bank of China injected liquidity into its money market, officials permitted a net CNY 70 billion withdrawal today. Officials at the Central Bank of Hungary, whose base rate was sliced by 15 basis points in both June and July to a current low of 0.60%,  will announce their latest interest rate decision later today.

Minutes from the Board meeting of the Reserve Bank of Australia earlier this month reaffirmed that any further easing is likely to be quantitative in nature and not adoption of negative interest rates. The Official Cash Rate was cut by 15 basis points to 0.10% at this meeting.

New Zealand’s service sector purchasing managers index increased 1.0 point to a 3-month high of 51.4 in October. A record low of 25.7 last April followed a pre-pandemic reading in February of 52.0.

Norwegian real GDP increased 4.6%  in 3Q following quarterly contractions of 1.5% in the first quarter and 4.7% in the second quarter. The reversed trend was concentrated in personal consumption and net exports. GDP rose 5.2% excluding the offshore oil industry.

Consumer confidence in Norway slid another 1.5 points to a reading of -11.5 in the fourth quarter, however. This compares to +12.0 in the final quarter of 2019.

Hong Kong’s jobless rate held steady at a 15-year high of 6.4% in October.

Italy posted a two-month high trade surplus of EUR 5.85 billion in September. This also exceeded but a factor of more than two the September 2019 surplus of EUR 2.696 billion.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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