Dollar Ending 2020 at Year’s Weakest Point

December 30, 2020

The trade-weighted DXY dollar index hit a new 32-month low today of 89.68, some 13% below the year’s high last March. Overnight losses amounted to 0.8% relative to the Australian dollar and sterling, 0.7% versus the New Zealand dollar, 0.5% against the yen, 0.4% vis-a-vis the Mexican peso, 0.3% against the Canadian dollar, 0.2% versus the euro and 0.1% relative to the Chinese yuan.

Britain’s parliament will be voting later today to approve the recent post-Brexit trade arrangement with the European Union. U.S. Senate Majority Leader McConnell prevented a debate and vote on increasing the size of pandemic relief checks from $600 to $2000, a move that was supported by the House of Representatives and President Trump.

Share prices overnight advanced 2.2% in Hong Kong, 1.9% in South Korea, 1.5% in Taiwan, and 0.7% in Singapore but fellĀ  1.0% in Indonesia and 0.5% in Japan’s final trading session of 2020 (Japan is now closed for the New Years Day holiday). European markets and U.S. stock futures are little changed.

Ten-year sovereign debt yields firmed overnight by two basis points in the U.K. and a basis point each in Germany and U.S. Treasury futures.

The price of West Texas Intermediate crude oil climbed 0.5%. Gold is steady.

Swiss retail sales in October reversed a 3.2% drop in September, resulting in a 3.1% 12-month rate of increase. Swiss investor confidence according to the ZEW expectations index leaped to a 6-month high in December of 46.8 from 30.0 in November and 2.3 in October. The KOF Swiss leaders index unexpectedly rose 0.6 points to a 2-month high of 104.3 in December.

Russia’s manufacturing purchasing managers index for December shows a closer move toward the “50” stabilization bar. The PMI rose 3.4 index points to a 4-month high of 49.7. Supply chain disruptions lifted inflationary pressures to there highest readings in nearly six years.

Britain’s monthly Nationwide house price index accelerated to a 6-year high of 7.3%.

The 12-month drop in Austrian producer prices of 1.4% was the least deflationary in November in nine months but below zero percent for an 18% month in a row.Greek PPI deflation swelled to a 6-month extreme of -9.0%, and Malaysian producer prices fell 3.0% over the twelve months through November.

Spanish consumer prices rose 0.2% for a second month in a row but were 0.6% below their year-earlier level in December.

Compared to November 2019 levels, South Korean retail sales and construction output fell 1.5% (the most in seven months) and 0.8%, respectively. But a 2.0% on-year decline of industrial production in October transitioned to a 0.5% on-year rise in November.

Spain‘s EUR 1.294 billion current account surplus in October was 53% narrower than a year earlier. There was a surplus of EUR 3.97 billion over the first ten months of 2020, down from EUR 21.1 billion a year earlier.

Portuguese industrial production slumped 5.0% on month in November, resulting in the largest on-year decline (3.6%) since July.

Thailand experienced its first current account deficit in November since May 2019 and largest shortfall since 2013.

The U.S. merchandise trade deficit swelled 5.5% to a record $84.82 billion in November, according to the preliminary report. The Chicago regional purchasing managers index and national pending home sales figures will be released later today.

In addition to Japan, South Korea, Indonesia, Brazil, Norway, Italy, Switzerland and Germany will observe either full-day or early market closures tomorrow.

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



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