Narrowly Mixed Dollar… Economic Sentiment in Euro Area at 4-Month Low

November 27, 2020

The United States on Thankgiving 2020 reported slightly more than a 100,000 new Covid-19 cases and suffered over 1150 deaths from that disease. Extensive traveling for the holiday is feared likely to fan the pandemic further next month.

The dollar overnight edged up 0.2% against sterling and 0.1% versus the yen and Swissy but slid 0.2% relative to the loonie and kiwi and by 0.1% vis-a-vis the euro and Australian dollar. The peso and yuan are steady on balance.

Share prices closed Friday up 1.1% in China, 0.4% in Japan, and 0.3% in Hong Kong, South Korea and New Zealand. Markets in India and Indonesia lost 0.3% and 0.4%. The British Ftse is down 0.5%, but markets in Germany, France and Italy show daily gains so far between 0.2% and 0.4%. In futures trading, the Nasdaq is up, but the DOW and S&P 500 are down.

The price of West Texas Intermediate crude oil dropped 0.7% but remains above $45/barrel versus $36-something at the start of November. The 10-year Treasury yield slipped two basis points in futures trading. The bond market will close early today at 13:00 EST (18:00 GMT).

On the political front, President Trump is continuing to flame the belief among Republicans that the election was fraudulent. Still unresolved trade talks between the U.K. and European Union are weighing on British financial markets.

Released data today are headlined by the monthly Euroland economic sentiment index, which declined 3.5 index points in November to a 4-month low of 87.6. That’s above April’s low of 64.9 but also well under the pre-pandemic level of 103.4 last February. Sentiment in the services and retail sectors hit 4-month lows as well, and consumer confidence dropped to a 6-month low. Sentiment in the industrial sector only fell 0.9 points to a 2-month low.

Upwardly revised French GDP rebounded 18.7% last quarter but was 3.9% below its year-earlier level. Swedish real GDP growth in 3Q was also revised higher to 4.7%. That followed two straight declines including -8.0% in 2Q and leaves year-on-year Swedish growth at minus 2.5%.

Real GDP in India was 7.5% lower in the third quarter than a year earlier, which compares with positive on-year growth of 4.4% in the third quarter of 2019 and +8.2% in the first quarter of 2018.

Taiwanese GDP was 3.9% above its year-earlier level in the third quarter.

GDP in Finland last quarter remained 2.7% lower than in 3Q19 despite a 3.3% quarter-on-quarter rebound.

Italian consumer confidence slipped to a 6-month low in November, and both overall economic sentiment and manufacturing sentiment in Euroland’s third largest economy slid to 3-month lows this month.

Portuguese consumer sentiment in November fell to a 4-month low, and business confidence was at a 2-month low. In Spain, however, business confidence improved to a 9-month high, albeit printing at a still-weak historical level of -7.7.

Business sentiment and consumer confidence hit 28- and 2-month lows, respectively, this month in Greece. Austrian business sentiment and consumer confidence were at 7- and 2-month lows.

Spanish retail sales were below their year-earlier level in October for an eighth straight month, but the 2.7% drop was the smallest in the streak. Retail sales in Norway and Ireland, by contrast, were 10.6% and 8.1% greater than levels in October 2019.

Tokyo core consumer prices in November were 0.7% lower than a year earlier.

Belgian CPI inflation of 0.5% in November represents a 6-month low. French CPI inflation of 0.2% was at a 3-month high, and a 2.5% on-year drop in Italian producer prices was the least negative in 9 months.

German import prices recorded their smallest year-on-year decline (3.9% in October) since February.

Mexico’s trade balance swung from a $680 million deficit in October 2019 to a $6.224 billion surplus in October 2020. Brazilian unemployment climbed from 11.0% in the final quarter of 2019 to 14.6% last quarter.

Chinese corporate profits in October exceeded the year-earlier level by 28.8%, but the average January-October level of profits was just 0.7% greater than a year earlier. It’s been that kind of year.

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


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