MarketDeal24.Com – Currencies and equities fell on Tuesday as US retail sales fell short of expectations. Consumer spending rose just 0.3% in October, from a growth of 0.5%. Expenditure growth has been much slower than in September. This weak report has now led to fears that retail sales will decline further in the next two months as corona virus infections are now growing at a much faster rate than last month. Some states have imposed lockdowns on their own to prevent coronavirus infections because their backs are against the wall and there are no instructions from the federal government.
Biotech companies are doing their best to invent vaccines. But even if everything goes well, we will not get the vaccine before the spring of 2021. This means that the economic recovery we saw in the third quarter is no longer visible in the fourth quarter. Meanwhile, Federal Reserve Chairman Jerome Powell said the economic recovery is now at risk. The USD/JPY pair has declined for four consecutive days due to weak retail sales reports. Today’s housing market and building permit report may come in handy as the housing sector has seen tremendous growth in recent times.
In Europe, coronavirus infections appear to be slowing down. Severe lockdowns across the continent have led to a decline in the number of corona infections in Germany, France, Italy, Belgium and the Netherlands. The number of infections has dropped dramatically in Belgium and the Netherlands. As of October 30, about 30,000 people were infected with corona in one day, which has now dropped to 4,800 in a single day. A maximum of 23,000 cases were reported in Germany in one day, which has now dropped to around 10,000. Infection is still on the rise, but it has been brought under control.
The euro has been on an upward trend against the US dollar for some time now and is trading above 1.18. The value of the euro is likely to rise further as the number of corona infections in the United States declines, but it will take some time, and corona infections in Europe will fall further in the meantime. However, the value of the euro could fall as lockdowns continue across Europe and the European Central Bank is almost certain to change its economic policy next month.
The strongest currency yesterday was the sterling. A UK newspaper reports that a trade deal between the UK and the European Union is likely to be reached next week. Although little progress has yet been made on the deal, given the willingness of the two sides and Sterling’s strong position, investors seem to be hoping for an agreement between the two parties this year. The UK CPI will be released today.
Meanwhile, the Australian, New Zealand and Canadian dollars also appreciated against the US dollar. Looking at the minutes of the Reserve Bank of Australia, it is clear that they are ready to give more incentives even though they want to buy bonds as they do not feel the need to cut interest rates at the moment. New Zealand’s services sector report is good, but the New Zealand dollar did not gain much because the stock market is down.