Dollar Down Amid Worries about the President’s Medical Condition

October 5, 2020

Medical reports on President Trump have been opaque and not entirely truthful. He’s been put on steroids and other meds consistent with a possibly serious case of Covid-19.

Today’s other attention-grabbing news has been reported progress in talks between the EU and U.K. over a post-Brexit trade arrangement.

The dollar fell overnight by 0.9% against the Mexican peso, 0.4% relative to the Swiss franc and Australian dollar, 0.3% versus the euro and Canadian dollar, 0.2% vis-a-vis the kiwi and 0.1% against sterling. The dollar rose 0.2% against the yen, in contrast.

The price of West Texas Intermediate crude oil rebounded 4.4%. Gold is hardly changed.

Stock markets  have mostly rallied, with gains of 1.2% in Japan, 2.6% in Australia, 1.8% in South Korea, 1.3% in Hong Kong and 0.9% in Singapore, as well as advances so far in Europe amounting to 1.1% in Spain, 0.9% in France, and 0.8% in the U.K., Germany and Italy.

Today’s menu of released data features many more¬† purchasing managers surveys for the month of September that show a setback in service sector activity.

In many cases, lower service PMIs stemmed from upturns in the pace of new Covid-19 infections. This was true of Euroland, where a 2.5-point drop in the services PMI to a 4-month low of 48.0 depressed the composite PMI reading to a 3-month low of 50.4. France, Ireland, and Spain scored sub-50 readings of 47.5, 46.8, and 42.4 that constituted respective 4- 3- and 4-month lows. Italy’s services PMI also was below 50 (signifying a worsening activity) but at a 7-month high, and Germany’s 50.6 reading represents a 3-month low nonetheless.

Britain’s service sector and composite PMIs constitute 3-month lows but, at 56.1 and 56.5, imply a considerably healthier pace of activity than experienced in the euro area.

The Russian and Swedish purchasing manager indices for services and total private activity also fell to 3-month lows of 53.7 and 54.7, resulting in 3- and 2-month lows in accompanying composite PMIs.

Japan’s services and composite PMIs improved to respective 8- and 7-month highs but, at 46.9 and 46.6, showed that activity in that economy continued to weaken. And Australia’s composite and service sector PMI’s of 51.1 and 50.8 reveal only marginally positive growth.

Private non-oil purchasing manager indices from the Middle East printed in September at a 14-month high in Egypt 50.4, a 7-month high in Saudi Arabia of 50.7, and a 3-month high in the United Arab Emirates of 51.0. Lebanon’s private purchasing managers index rose 2.0 index points but revealed continuing sharp rates of contraction with a reading of just 42.1.

The pandemic is lately weighing more heavily on services than manufacturing. Taiwan’s factory PMI rose 3.0 points to an 18-month high of 55.2 in September. South Korea’s manufacturing PMI of 49.8 signaled the slowest rate of contraction in 8 months. For South Africa according to an index compiled by Standard Bank, the PMI rose 3.9 points to an 11-month high of 49.4, and Singapore’s manufacturing PMI rose 1.5 points to a 2-month high of 45.1.

Retail sales volume in the euro area had dropped 1.8% in July but rebounded 4.4% in August to generate a 33-month high of 3.7% in its year-on-year growth.

Retail sales in Hungary posted a fourth consecutive month-on-month increase in August of 1.5%, but its on-year change slid back into the red (-0.7%). Romanian retail sales fell 1.6% on month, resulting in a halving of the 12-month rate of increase to 2.3%.

Spanish consumer confidence fell 0.4 index points to a 93-month low of 49.5 in September.

Retail sales in Singapore rose 1.5% on month but were 5.7% fewer than in August 2019.

The Sentix gauge of investor confidence in Euroland improved to an 8-month high of -8.3 in October, having bottomed in May at -41.8.

The European Union’s collective current account surplus in the second quarter widened 14% on year to EUR 82.9 billion, representing 2.7% of GDP.

The on-year rate of CPI deflation in Cyprus shrunk to a 6-month low of 0.9% in September.

In Thailand, consumer prices in September were 0.7% lower than a year earlier, marking the greatest 12-month drop since 1.0% in July.

Turkish CPI inflation of 11.75% in September was insignificantly different from the outcomes in July and August, but PPI inflation, which is more sensitive than the CPI to the falling lira, swelled to a 14-month high of 14.4%.

Australia’s business conditions index was non-positive for an eighth straight month in September at -4, but that was only half as negative as its level in August.

Still to come: the U.S. non-manufacturing PMI survey and employment trends index. Also, monetary policy is being reviewed in Romania.

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


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