Dollar Firms…. Trump Wants Big Changes in Pandemic Relief Bill

December 23, 2020

The dollar rose overnight by 0.5% against the Swiss franc, 0.4% versus the euro, Aussie and New Zealand currencies and Mexican peso, and 0.2% relative to the yen, loonie, and sterling.

Stocks also rebounded, with Asian gains of 1.0% in India and South Korea, 0.9% in Hong Kong, 0.8% in China, 0.3% in Japan, and so far 0.7% in Spain, 0.6% in Germany and 0.5% in France and Italy. But U.S. futures were up just 0.2% just prior to today’s released batch of U.S. data.

U.S., German and Japanese 10-year sovereign debt yields are unchanged, as is the price of WTI oil. Gold has slipped 0.3%.

A reduction in daily Covid cases and deaths earlier this week has been reversed. U.S. cases went up over 200k yesterday and was correlated with more than 3k deaths.

Playing the Grinch, President Trump threatened to veto the hard-won bipartisan pandemic relief package unless significant and sweeping modifications are made by Congress.

Thailand’s Monetary Policy Committee, which earlier this year authorized 25-basis point interest rate cuts in February, March and May to a record low of 0.50%, again left that level unchanged. A released statement by the Bank of Thailand projects a 6.6% GDP contraction this year and revised growth in 2021 lower by 0.4 percentage points to 3.2%. “The Committee continued to put emphasis on supporting the economic recovery. The Committee would monitor the adequacy of the government measures and various risks, especially the new wave of the domestic outbreak in deliberating monetary policy going forward.

Minutes from the Bank of Japan‘s Board meeting reflect majority support for continuing the current policy stance but augmenting such only if needed.

U.S. data released were mixed. New weekly jobless insurance claims fell by a greater-than-expected 89k to a 3-week low of 803k, and durable goods orders advanced 0.9% in November versus expectations centered on a 0.6% rise. However, personal income plunged 1.1% last month, four times faster than projected, and a 0.4% slide in personal expenditures was twice as steep as anticipated. Inflation measured by the total PCE price deflator (1.1%) and core PCE (1.4%) meanwhile undershot expectations. The FHFA index of U.S. home prices climbed 1.5% in October and accelerated to a 10.2% 12-month rate of increase.

Over the 12 months through November, producer prices in Finland, Spain and France dropped by 4.6%, 2.8% and 1.8%, respectively, and German import prices fell 3.8%. Belgian CPI inflation edged down to a 13-month low of 0.4% in December.

Italian consumer confidence rose 4.0 index points in December to a 3-month high, while manufacturing business sentiment jumped 5.0 points to a 10-month high this month.

Spanish GDP growth last quarter was revised downward by 0.3 percentage points to +16.4%. But GDP had previously swooned 5.3% in 1Q and plunged 17.9% in the second quarter, and so the third-quarter GDP was still 9.0% below its year earlier level.

Danish GDP growth last quarter was revised upward to 5.2% from 4.9% estimated earlier. GDP was also 3.7% lower than its year-earlier level.

Austrian industrial production dropped 0.6% on year in October, the smallest decline in a streak of negative 12-month comparisons going back to February.

Taiwanese industrial production and retail sales posted on-year increases of 7.8% and 2.5% in November. Consumer confidence improved to a 7-month high in November.

The Mexican index of economic activity rose 1.6% on month but fell 5.3% on year in October.

Canadian monthly GDP compiled from supply-side data grew 0.4% in October, a tad more than forecast and resulting in a 3.5% 12-month rate of decline. Industrial production contracted 0.4% in the latest month and was 7.0% lower than a year earlier.

Still to come: U. Michigan index of  U.S. consumer sentiment.

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

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