Dollar Drops Additionally, and Stock Markets Down Too

December 30, 2019

The dollar slid overnight by a further 0.3% against the yen, sterling, Swiss franc and Australian and New Zealand dollars. The dollar also fell 0.2% against the euro and by 0.1% relative to the yuan and loonie. This extends the losses before the weekend on Thursday and Friday.

Stock markets in the Pacific Rim weakened 0.8% in Japan, 0.7% in New Zealand, 0.5% in Indonesia and 0.3% in South Korea and Taiwan. Equities so far in Europe are down 0.6% in Germany and Italy, 0.5% in Switzerland, 0.4% in Spain and 0.3% in France.

However, in China where the central bank on Saturday signaled a change in how the interest rate on existing floating-rate loans will be determined, stocks rose 1.2%. Interest rates after January 1 will be more sensitive than before to market forces and therefore presumably lower. The move is intended to counter a slowdown in Chinese growth.

Ten-year sovereign debt yields have increased by 8 basis points in the U.K., 6 bps in Germany and 5 bps in the United States. The price of WTI oil is up 0.2%, while that of gold eased 0.3%.

There’s been a confirmation of the earlier estimated 0.4% Spanish GDP growth rate in the third quarter, but the on-year growth rate was revised down 0.1 percentage point to 1.9% and 0.3 percentage points below year-on-year growth in the third quarter of 2018. Net foreign demand exerted a 0.8-percentage point drag on last quarter’s growth.

Spain also reported a 7-month high of CPI inflation to 0.8% this month and a EUR 2.83 billion current account surplus in October, up from EUR 1.49 billion a year earlier.

Russia’s manufacturing purchasing managers index in December for an eighth straight month stayed under the 50 level that separates improvement from deterioration, but it recovered 1.9 points from November’s 126-month low of 45.6.

Norwegian retail sales in November was 0.8% higher than a year earlier. In Portugal that month, retail sales recorded a 3.7% on-year advance, but industrial production was merely 0.2% above its year-earlier level. Still that was the largest 12-month rise of 2019.

Austrian producer price inflation was negative in November (-1.1%) for a sixth straight month. The drop matched that in September but was smaller than October’s 1.5% decrease. Greek PPI inflation of 1.1% was above zero percent for the first time since May.

The Swiss kof index of leading economic indicators increased to a 5-month high of 96.8 this month.

South Korean industrial production was 0.3% below its year-earlier level in November, the third negative comparison in four months. Retail sales growth accelerated to 3.7%, however.

Hong Kong experienced its smallest November trade deficit in ten years.

Thailand’s $8.44 billion eleven-month trade surplus was more than twice the size of the year-earlier $3.45 billion surplus.

Sweden’s January-November trade balance swung from a deficit of SEK 33.5 billion in 2018 to a surplus of SEK 20.4 billion this year.

Four U.S. economic indicators are scheduled for release later this morning: the preliminary trade balance, the Chicago regional purchasing managers index, the Dallas Fed manufacturing index, and pending home sales. President Trump has tweeted the identity of the alleged whistle blower that triggered the impeachment hearing, but most news agencies so are are keeping the name secret.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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