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© Reuters Investing.com – A few hours before the US election scheduled for Tuesday, which will determine who will be the White House’s new resident in the United States of America.
Many questions and inquiries arise … What is the world economic situation like, what happened in the last few days leading up to the world’s biggest event.
The American economy
U.S. gross domestic product grew 33.1% year-over-year in the third quarter of 2020, beating expectations by 32%.
The data follows the worst quarterly performance in history, with economic performance falling 31.4% in the second quarter of this year, hit by the unprecedented impact the pandemic has left around the world.
Despite the positive nature of this news and its contribution to improving the performance of Wall Street stocks.
However, the United States may find it difficult to pursue an economic recovery in the future with the resurgence of COVID-19 cases.
There are still 12.6 million Americans unemployed in the country after the loss of 22 million jobs in March and April, while the unemployment rate remains at 7.9%.
Dollar
The US dollar responded positively to this data as it rose 1.2% to end the trading week, closing at 93.89.
In contrast, the British pound fell against the US dollar, ending the week at 1.1647 and 1.2941, respectively.
Inflation
New orders for manufactured capital goods in the United States rose 1.9% in September against expectations of a 0.5% increase, followed by a 0.4% increase in August.
Core inflation, which excludes transport components, rose 0.8% against expectations of a 0.6% increase.
The government’s financial stimulus package, which topped more than $ 3 trillion in value and was launched earlier this year, has helped provide the economic support many businesses and the unemployed desperately needed, which has leads to increased consumer spending.
Recently, however, funding sources have dried up along with the increase in HIV cases, despite the strong economic recovery in the third quarter of this year.
However, the slowing economic recovery in the fourth quarter of this year is causing concern.
Houses
Sales of new homes to nine families in the United States fell in September after four consecutive months of growth.
However, the housing market is still supported by historically low mortgage interest rates and growing demand due to the continuing outbreak of the pandemic.
New home sales fell 3.5% to annual sales of 959,000 units, from 994,000 units in August.
Trust
Expectations of economic turbulence in the fourth quarter of this year were boosted by the drop in the consumer confidence index in October.
The U.S. Conference Board said last week that the Consumer Confidence Index fell in October to 100.9 points, from 101.3 in September.
In contrast, economists expected the index to rise to 102 points.
The Conference Board said: “There is no indication that consumers expect the economy to gain momentum in the final months of 2020, especially in light of the high incidence of Covid-19 and still high unemployment rates. ”
Europe
The European Central Bank decided to hold interest rates and continue its monetary policy on all tracks unchanged at its last meeting, which was held last week.
This despite its allusion to more monetary stimuli in the future.
Speaking at a press conference following the announcement, European Central Bank President Christine Lagarde said the economic recovery in the euro area “is losing momentum faster than expected”.
She added: “The high incidence of Covid-19 and the resulting intensification of precautionary measures to contain the pandemic cast a shadow over economic activity, leading to a marked deterioration in the short-term outlook.”
Europe has recorded more than 6 million infections so far, as it is currently experiencing the outbreak of the second wave of the pandemic.
These developments have dashed expectations of a strong economic recovery in the second half of 2020.
Brexit
In mid-October, the EU summit failed to deliver the results the UK and EU were hoping to achieve.
However, as both sides expected to reveal their agreement at the summit, some major issues hampered negotiations between the two sides and no agreement was reached.
After the summit ended, things were not going well.
The European Union has issued a statement saying that in order to resume negotiations, the UK must take the necessary steps to make the deal possible.
The UK opposed and called on the EU to change its strategy, noting that if the EU does not radically change its strategy, the negotiations will stop.
However, developments in recent days indicate that the matter is not yet over. Where negotiations resumed in London on October 22 and lasted for a week, then British negotiators headed to Brussels for another round of negotiations.
10 points
The two sides released a 10-point plan, indicating that the two sides agreed to intensify negotiations.
Which will take place on all trading tables simultaneously and daily, including weekends.
A deal could still be found, as the European Union has said that even though a deadline is set to coincide with the EU summit in mid-October.
The deadline for reaching a deal is mid-November, but any delay can make it difficult to ratify the deal on time.
Japan
At its last meeting, the Bank of Japan chose to keep its monetary policy unchanged at -0.1%, with a decision handed down by 8 votes to 1.
In the bank’s statement, he said that at present, “the bank will closely monitor the repercussions of the pandemic and will not hesitate to take additional facilitation measures if necessary.”
It is also expected to keep short and long term interest rates at or below their current levels.
The Bank of Japan has lowered its growth outlook for 2020 despite anticipating a stronger economic recovery in 2021.
Japan’s economy is expected to contract 5.5% in the fiscal year ending March 2021, compared to previous expectations of a 4.7% contraction.
As in the following year, the central bank expects a recovery of 3.6% followed by growth of 1.6% the following year.
Even with the pandemic largely under control, Asia’s largest economy is expected to grow slowly due to cautious consumers and businesses.
Oil
The results of the US presidential election cast a shadow over the oil market.
Democratic candidate Joe Biden, who by most polls is leading the presidential race, has said he will seek to bring Iran back to the 2015 nuclear deal.
In this case, the United States could potentially relax economic sanctions imposed by President Trump, which would allow the export of more than 2 million barrels per day of Iranian oil.
Currently, OPEC and its allies agreed last April to cut production quotas by 9.7 million barrels per day, or about 10% of global supplies.
The cuts were relaxed in August, although the organization and its allies are due to reconsider their plan in January.
The price of the blend fell about 11% last week to the 36.64 level.
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