Stronger Dollar After Weak European Preliminary November Purchasing Managers Survey – Currency Thoughts
Stronger Dollar After Weak European Preliminary November Purchasing Managers Survey
November 22, 2024
The dollar was already experiencing a post-U.S. election flight-to-safety rally. Elections have a propensity to introduce uncertainty. With other branches of the government on his side, President-Elect Trump plans several policy changes that will make economic life more difficult in other countries. The preliminary findings of November purchasing manager surveys confirmed heighted anxiety, weaker growth and an uptick in cost pressures in Europe.
The euro, which has only rarely fallen below dollar parity during its 26-year existence, got touched a low of $1.0332 overnight, its softest quote since November 2022. The all-time trough, $0.8228 was touched in October 2000 during the currency’s infancy.
On balance, the dollar has strengthened so far today by 0.6% against the Swiss franc and sterling, 0.5% relative to the euro. The dollar ticked 0.1% lower versus the yen.
Bitcoin’s post-election moonshot continued, taking such very near to $100000, with an intra-day high earlier of $99,347. Gold’s price has risen 1%, while oil is 0.9% softer.
Ten-year sovereign debt yields are down by eight basis points in Italy, six bps in the U.K., France and Spain, one basis point in Japan and four basis points in both Germany and the United States.
Equities this Friday experienced more wild swings, ranging from losses of 3.1% and 1.9% in China and Hong Kong to gains of 2.1% in New Zealand, 2.6% in Taiwan, 2.5% in India, and 0.7% in Japan. The DOW and SPX opened a touch higher, while the Nasdaq dipped.
Euroland’s composite purchasing managers index slumped 1.9 points to a 10-month low. Readings below 50 signify deterioration. The services PMI reading of 49.2 was also at a 10-month low in November, while the manufacturing index recovered only 0.2 points to a still depressed 2-month high of 45.2. The German and French composite PMIs printed at 9- and 10-month lows of 47.3 and 44.8.
Britain’s composite PMI slumped 1.9 points to a 13-month low of 49.9. Services, as in the euro area, led the way down with a 2.8-point drop to a 13-month low of 50. The manufacturing PMI of 48.6 was its lowest in 9 months.
Japan’s composite preliminary PMI edged up 0.2 points but stayed under 50 for a second consecutive month, printing at 49.8, with a manufacturing 4-month low of 49.0 and services 0.5 points higher at 50.2.
Australia’s composite PMI sank to a 10-month low of 49.4, while India’s composite PMI of 59.5 was at a 3-month high.
In other data news this Friday, Japanese core consumer price inflation fell to a half-year low of 2.3% in October.
British retail sales last month performed noticeably worse than thought, dropping 0.7% on month and posting a smaller 2.4% year-on-year advance after +3.2% recorded in the year through September. Consumer sentiment stayed below zero this month at -18 but was its least negative since -13 in August.
German quarterly GDP growth last quarter has been revised lower to a mere 0.1%. Compared to the summer quarter of 2023, real GDP sank 0.3%, matching its drop over the previous four quarters ending in 3Q 2023.
Mexican GDP growth last quarter has been revised 0.1 percentage point higher to a quarterly advance of 1.1%. GDP was also 1.6% above its year-earlier level.
Canadian retail sales in October rose 0.4% on month and 0.8% on year.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British and Canadian retail sales, German and Mexican GDP, Preliminary purchasing manager survey results for November 2024
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