US gross domestic product shrank the most on record in the second quarter and 17 million Americans claimed state unemployment benefits in mid-July. The GDP dropped 32.9% when annualized while 900,000 more people claimed benefits. Crucial lifelines in the pandemic, like the extra $600 in weekly unemployment benefits, are expiring. Lawmakers have made little progress on agreeing to another stimulus package. President Trump raised the idea of delaying the Nov. 3 US elections, although the notion was immediately rejected by both Democrats and his fellow Republicans in Congress. The US government has already spent $3 trillion for pandemic stimulus while the Federal Reserve flooded the banking system with dollars through its aggressive easing policy.
Britain reported its highest number of new COVID-19 infections in more than a month on Thursday, amid fears of a second wave of cases in Europe and warned more quarantine restrictions were possible. Tougher lockdown measures were announced in the north of England with people told not to socialise with other households. British house prices jumped by the most in 11 years this month, reversing about half their losses due to the impact of COVID-19. The British pound has gained steadily against the USD returning to pre-pandemic levels despite the fact that the United Kingdom suffered the highest rate of excess deaths during the COVID-19 pandemic in a comparison of 21 European countries.
Spain recorded a historic fall in GDP in the second quarter of the year, with the 18.5% drop wiping out all the post-financial crisis recovery of the last six years. French consumer spending shot back above pre-lockdown levels in June after a plunge earlier in the quarter but the economy contracted by 13.8% in the second quarter, as household consumption, company investment and trade all collapsed under a nationwide lockdown imposed to contain the coronavirus epidemic. The contraction in the euro zone’s second-largest economy was steeper than the 10.1% reported by Germany, where authorities kept a surge in COVID-19 related deaths in check and did not have to enforce an as strict lockdown. ECB’s President Christine Lagarde said the European Central Bank has to maintain the “safety net” of its massive bond purchases at least until June 2021 to help underpin the economy, reaffirming the bank’s policy stance.
The dollar slipped to two-year lows and is on track to post its biggest monthly decline in 10 years, as investors worried that a recovery in the US economy would be hampered by the country’s struggle to stem the coronavirus epidemic. Confidence in the USD was undermined further after US President Donald Trump raised the possibility of delaying the nation’s November presidential election. A benchmark tracking the US dollar looks set to match its worst month in a decade, while gold is headed for the biggest monthly gain in more than four years. The euro last traded at $1.1874 while the dollar hit a 4-month low of 104.195 against the yen and last stood at 104.55 JPY, having lost 3.3% this month.