The Coronavirus outbreak story was the main driver for the Greenback, overshadowing a busy week of mixed U.S. economic data and the latest FOMC monetary policy meeting.
United States Headlines and Economic data
- U.S. new home sales drop for third straight month in December
- The Dallas Federal Reserve index for general business activity for January was negative 0.2
- The Coronavirus story (China confirms 2,700 cases of virus, 40 counted elsewhere) was the major market driver for the week, pushing traders out of “riskier” assets into less riskier assets. For the Greenback, this meant that it outperformed against the more “risk-on” currencies like the comdolls (AUD, NZD & CAD), while falling to the low-yielders / safe havens (JPY, CHF & EUR) early and throughout the week. It also under performed against the British pound due to the Bank of England holding off from cutting interest rates at the latest monetary policy meeting this week.
- Nationally, prices increased 3.5% annually in November, up from 3.2% in October, according to the S&P CoreLogic Case-Shiller National Home Price Index.
- US core capital goods orders post biggest drop in 8 months
- The Conference Board’s U.S. consumer confidence index rose to 131.6 this month from 126.5 in December.
- Richmond Fed Manufacturing Gauge Surges to Best Level Since 2018
- Weekly mortgage applications surge over 7% as rates fall on coronavirus fears
- The U.S.’ international advance trade in goods deficit increased to $68.3B in Dec. from $63.0B in Nov.
- Advanced U.S. wholesale inventories for Dec. 2019 were down -0.1% from Nov. 2019 to $675.6B
- December pending home sales fall 4.9% as supply hits a record low
- Fed leaves rates unchanged, offers no new guidance on balance sheet
- Trump signs USMCA, ‘ending the NAFTA nightmare’; key Democrats not invited
- Fed boosts interest rate on bank reserves
- Risk aversion behavior picked up quickly on the session, once again on Coronavirus fears as there was nearly 1,500 new cases in a few days and the death toll rose to 132.
- Fourth-quarter GDP rose only 2.1% and full-year 2019 posts slowest growth in three years at 2.3%
- U.S. unemployment rate remained at the 50-year low level of 3.5%
- Coronavirus declared global health emergency by WHO
- U.S. consumer spending rises steadily; inflation remains tame
- Employment cost index increased 0.7%, seasonally adjusted, for the 3-month period ending in Dec. 2019 – U.S. Bureau of Labor Statistics
- Personal income increased $40.7B (0.2%) in December; Disposable personal income (DPI) increased $30.6B (0.2%)
- Chicago manufacturing activity slumps in January to weakest reading since late 2015
- U.S. Consumer Sentiment Unexpectedly Improves In January
- Risk aversion accelerates once again during the Friday session as the US raises travel warning, Singapore bans Chinese travelers as outbreak spreads. Also, the U.S. declares coronavirus a public health emergency.