Daily update

  • US President-elect Trump has threatened to tax US consumers aggressively via tariffs, if countries “replace” the dollar. It is not clear what “replacing” means. The US dollar is only one international invoicing currency among many. Over half of Eurozone exports are invoiced in euros, for instance. Invoicing status is of limited importance.
  • Reserve status is different—this is about where the proceeds of trade end up (what assets are used to store money earned from trade). The dollar holds reserve status because it is seen as a safer location than the alternatives. Threats to the dollar’s reserve status would be domestic, not international: weakening the rule of law, excessive fiscal deficits, or economic nationalism reducing trade and capital flows would be obvious threats.
  • South Korea’s November export data was weaker than expected (although only a handful of economists form the consensus). Semiconductor demand seems to be holding up, but other exports were softer. Despite talk of US consumers stockpiling goods ahead of threatened taxes, there is not much time to implement this strategy.
  • Assorted business sentiment polls are due from various countries. With more objective data available (e.g. credit card numbers), and more evidence of biases distorting survey responses, surveys are more noise than information.
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