US Dollar Falls Amid Weak Economic Data, Euro Steady

Market Reviews

New Zealand dollar and Australian dollar are the strongest ones for today, followed by the euro. The single currency is steady today, despite European Commission has started step one in preparation for disciplinary action on Italy over its budget. Japanese yen turns weaker, followed by US dollar and British pound. The USD is weighed down by disappointing US data.

On stock markets, FTSE added 1.10%, DAX gained 0.98%, CAC rose 0.56%. In Asia, Nikkei close down 0.35%. But Hong Kong HSI, China Shanghai SSE and Singapore Strait Times were all up, by 0.51%, 0.21% and 0.39% respectively.

The European Commission took the first step towards Italy with respect to its draft budget and stated that the government should face EU action to reduce its deficit. The Commission also noted that the fact that macroeconomic conditions, despite recently intensified downside risks, cannot be argued to explain Italy’s large gaps to compliance with the debt reduction benchmark, given nominal GDP growth above 2% since 2016.

The Organisation for Economic Cooperation and Development (OECD) stated, that global trade tensions and higher interest rates will influence growth of the global economy in the coming years. For 2019, global growth forecasts was revised down to 3.5% and stay there in 2020. US growth was left unchanged at 2.7% in 2019 and then slow to 2.1% in 2020. Eurozone growth was revised down to 1.8% in 2019 then slow further to 1.6% in 2020. Japan growth would accelerate to 1.0% in 2019, an upward revision, but slow to 0.7% in 2020. China’s growth is projected t slow to 6.3% in 2019, downwardly revised, and then further to 6.0% in 2020.

Italy’s Istat (National Institute of Statistics) revised down both 2018 and 2019 GDP growth forecasts. For 2018, growth is projected to be at 1.1%, down from May’s forecast of 1.4%. For 2019, growth is projected to be at 1.3%. Istat’s forecast for 2019 is notably lower than the coalition government’s overly optimistic 1.5%. But it’s higher than European Commission’s 1.2% and IMF’s 1.0%. GDP forecast is a key figure in Italy’s draft budget plan.

Today’s US economic data showed, that initial jobless claims rose 3k to 224k in the week ended November 17, above expectation of 215k. Continuing claims dropped -2k to 1.668M in the week ended November 10. Four-week moving average of continuing claims rose 7.5k to 1.650M. Headline durable goods orders dropped sharply by -4.4% in October, missed expectation of -2.5%. Ex-transport orders rose just 0.1%, missed expectation of 0.4%.