· The dollar held firm at start of holiday-thinned week on Monday after U.S. data pointed to solid economic growth while the British pound found some stability after having suffered its biggest weekly fall in three years.
A batch of economic data published on Friday showed the U.S. economy, already in its longest expansion in history, appears to have maintained the moderate pace of growth as the year ended, supported by a strong labor market.
Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said in its third estimate of third-quarter GDP. That was unrevised from November’s estimate.
“The U.S. economy appears to have stopped slowing. There is no indication it will be hitting a recession,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The euro stood at $1.10775, in retreat since it hit a four-month high of $1.12 on Dec. 13.
The dollar index was at 97.682, flat on the day but maintaining its recovery trend since hitting a five-month low of 96.605 on Dec. 12.
Against the yen, the dollar was traded at 109.47 yen, up 0.04% from late U.S. levels, not far from six-month high of 109.73 touched earlier this month.
· U.S. business spending on equipment appears soft; housing steadies
New orders for key U.S.-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter.
The White House’s 17-month-old trade war with China has hurt business confidence, undermining capital expenditure. Despite a recent easing of tensions, regional manufacturing surveys showed business confidence remaining subdued in December.
While manufacturing is struggling, the housing market is steadily rising, driven by the Federal Reserve’s three interest rate cuts this year. In a second report on Monday, the Commerce Department said new home sales rebounded 1.3% to a seasonally adjusted annual rate of 719,000 units last month, lifted by gains in activity in the Northeast and West regions.
October’s sales pace was, however, revised down to 710,000 units from the previously reported 733,000 units. New home sales are volatile on a month-to-month basis because they are drawn from a small sample of houses selected from building permits. Sales jumped 16.9% from a year ago.
“We expect housing activity to remain supported with now-lower mortgage rates and a Fed on hold, but do not expect a further substantial pick-up in activity into 2020,” said Veronica Clark, an economist at Citigroup in New York.
· China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.
Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday. That compared with 706 products that were taxed at temporary rates in 2019.
· Oil prices were little changed on Monday as Russia said an OPEC-led producer group may consider easing output cuts next year, offsetting support from some investor optimism that an initial U.S.-China trade deal would be signed soon.
Brent crude was up 28 cents, or 0.4%, at $66.42 per barrel in thin trading ahead of the Christmas holiday. West Texas Intermediate gained 8 cents to settle at $60.52 per barrel.
The Organization of the Petroleum Exporting Countries and other top producing nations led by Russia agreed this month to extend and deepen output cuts in the first quarter of 2020.
However, Russian Energy Minister Alexander Novak said on Monday that the group, known as OPEC+, may consider easing the output restrictions at its meeting in March.
Reference: CNBC, Reuters
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