January 15, 2019
United States (US): PPI
US PPI dropped by 0.2% in December after 0.1% increase in November. The modest pullback in producer prices was partly due to another steep drop in energy prices, which plunged by 5.4% in December after tumbling by 5.0% in November. Food prices surged up by 2.6%. Core PPI edged down by 0.1% in December after climbing by 0.3%.
European Union (EU): Trade Balance
Euro traded at 1.1413 against USD at 2:00 pm PST.
Eurozone's trade surplus fell to EUR 19 billion in November from EUR 23.4 billion a year ago. Exports increased 1.9% YoY and imports rose 4.7%. In the January to November period, exports rose 4.2% from a year ago and imports climbed 6.6%. The trade surplus decreased to EUR 175.2 billion from EUR 210.4 billion in the same period last year.
Germany: GDP Growth
Germany’s economy growth at 5-year low in 2018 largely driven by a weaker global economy and poorer sales in the automobile industry due to the implementation of new emission standard. GDP grew 1.5% in 2018, compared with 2.2% in 2017. Both household final consumption expenditure and government final consumption expenditure were up 1.0% and 1.1%, respectively on the previous year. However, the growth rates were markedly lower than in the preceding three years.
United Kingdom (UK): Voted Down Brexit
British Pound traded at 1.3266 against USD at 2:00 pm PST.
GBP plunged over 1% immediately follow the Brexit vote but recovered to positive territory as traders bet the possibility of a hard Brexit were decreasing and a higher probability of an extension of the March 29 exit date. MPs voted by 432 votes to 202 to reject PM May's Brexit deal - the largest defeat for a sitting government in history. Labor leader Corbyn has now tabled a vote of no confidence in the government to be held tomorrow, which could trigger a general election. If a majority of MPs vote for the motion, then it starts a 14-day countdown. If during that time the current government, or any other alternative government cannot win a new vote of confidence, then an early general election would be called. That election cannot happen for at least 25 working days.
Following a controversial amendment, the UK government now has just three working days to map out a new plan of action. A new plan must be agreed with Europe and presented to UK lawmakers by the close of business on Monday January 21. Six potential outcomes are renegotiation, general election, second referendum, extending Article 50, no Brexit and no-deal Brexit.
Onshore Chinese yuan traded at 6.7595 per USD at 2:00 pm PST and offshore Chinese yuan traded at 6.7730 per USD.
Chinese foreign direct investment into the US plummeted for a second year in a row. In 2018, Chinese FDI in the US fell to just $4.8 billion - a massive decline from $29 billion in 2017 and $46 billion in 2016. The 2018 figure marks a 90% drop from 2016 and represents the lowest level of direct investment by China since 2011. The decline comes amid trade tensions between the US and China and as Beijing adds pressure on Chinese companies to reduce their global holdings and reduce debt levels.
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