Dollar Mostly Steady on a Busy Day for Data Releases

August 14, 2012

The dollar is unchanged overnight against the yuan, kiwi, loonie and sterling.  It is 0.2% firmer versus the yen and has slipped 0.1% relative to the euro, Swissie, and Australian dollar.

Share prices are mostly stronger.  Equities advanced 1.3% in South Korea, 1.1% in Hong Kong, 0.8% in Singapore, 0.6% in Thailand and Taiwan, 0.5% in Japan, India and Indonesia, 0.4% in Malaysia and New Zealand, and 0.2% in China and Australia.  The Paris Cac, Spanish IBEX, and British Ftse also have risen 0.5%, while the German Dax shows a 0.8% gain.

Oil prices firmed 0.4% to $93.12 per barrel.  Gold edged up 0.1% to $1614.50 per ounce.

Yields on ten-year German bunds and Japanese JGBs are up two and one basis points.

EU second-quarter GDP figures were released and proved to be a tad better than feared.

  • German GDP increased for a second straight quarter, climbing 0.3% versus 1Q and by 1.0% on year.  Net exports and personal consumption rose, but investment contracted.
  • French GDP recorded no change for a third straight quarter and was 0.3% higher than a year earlier.  Final domestic demand augmented GDP growth by 0.1 percentage points, but net exports exerted a 0.5 percentage point drag.  Inventories had a positive effect on GDP growth last quarter.
  • Euroland GDP dipped 0.2% on quarter, half as much as many analysts were expecting.  On-year growth was negative 0.4%.
  • Dutch GDP increased 0.2% for a second straight quarter, halving its on-year decline to 0.5%.
  • Second-quarter GDP rose by 1.0% in Latvia, 0.7% in Slovakia, 0.4% in Estonia and Lithuania.
  • In the most troubled euro area economies, GDP fell by 0.7% on quarter and 2.5% on year in Italy, by 0.4% on quarter and 1.0% in Spain, by 1.2% from 1Q and 3.3% on year in Portugal, by 0.8% on quarter and 2.4% on year in Cyprus, and by 6.2% on year in Greece (where no quarterly figure was reported.) 
  • Finnish GDP slumped 1.0% on quarter, cutting on-year growth to 0.6%.
  • Belgian GDP, which is particularly sensitive to export demand, sank 0.6% from 1Q and by 0.4% on year.
  • Austrian GDP posted increases of 0.2% both from the quarter before and in on-year terms.
  • Among key economies in Eastern Europe, GDP in Hungary fell by 0.2% on quarter and 1.0% on year.  Czech GDP also dropped 0.2% on quarter and fell 1.2% on year.  Romanian GDP rebounded from declines in 4Q11 of 0.2% and 1Q12 of 0.1% with a 0.5% increase last quarter.  On-year Romanian growth doubled to 1.7%.  Bulgarian GDP rose 0.2% from 1Q and climbed 0.5% on year.

Euroland industrial production declined 0.6% in June and was 2.1% lower than a year earlier.  Second-quarter output dropped 2.3% at an annualized rate from the first-quarter level.  Germany, France, Italy, and Spain each reported both monthly and yearly declines in industrial production for June.

Swedish industrial production rose 0.4% in June and by 1.1% on year.  Finnish retail sales volume rose 2.3% in the year to June.  Wholesale turnover was up just 0.5%.

The ZEW Institute released measures of investor confidence in Germany and the euro area.  For Germany, the expectations index moved more deeply into pessimistic territory, plumbing to an August reading of minus 25.5 from minus 19.6 in July, minus 16.9 in June and +10.8 in May, and the current conditions component slid to 18.2 from 21.1 in July, 33.2 in June, and 44.1 in May.  Euroland’s expectations index improved, however, to minus 21.2 in August from negative 22.3 in July even though current conditions fell to negative 75.1 from minus 72.9 in July.

British inflation unexpectedly reversed its recent downtrend in July.  Consumer prices — both the headline and core measures — firmed 0.1% on month.  The 12-month CPI rates of increase rose to 2.6% from 2.4% for all items and to 2.3% from 2.1% for the core index.  Retail price inflation also ticked higher, rising to 3.2% from 2.8%.

Several other countries also reported price data.  French CPI inflation held at 1.9% in July.  The Swiss PPI/import price index fell by 0.3% between June and July and was 1.8% lower than in July 2011.  Swedish CPI inflation edged down to 0.7% in July from 1.0% in June.  Hungarian CPI inflation accelerated to 5.8% in July from 5.6% the month before.  In Finland, CPI inflation edged up in July to 2.9% from 2.8%.  Spanish consumer prices dipped 0.2% on month in July but posted the largest year-on-year increase (2.2%) since December.

Two British housing market indicators were released.  The Royal Institute of Chartered Surveyors house price balance measure plumbed to a nine-month low of negative 24% in July after a reading of minus 22% in June.  And the ONS house price index, formerly compiled by the Department of Communities and Local Government, rose 0.5% on month in June and retained a 12-month increase of 2.3%.

Japan’s tertiary index, a monthly gauge of service sector activity, rose 0.1% in June and by just 0.8% on year.  The tertiary index was unchanged for a second straight calendar quarter and 2.2% higher in 2Q12 than in 2Q11.  Minutes from the Bank of Japan’s July policy meeting spoke toughly about being prepared to take action to insure that the 1% medium-term inflation target is met, but no action was taken then.

Wholesale price inflation in India surprisingly dropped to 6.87% in July from 7.25% in June.  Indian consumer confidence rose 0.8 points to a reading of 41.1 in July.

July motor vehicle sales in Australia fell 0.8% on month and to a 12-month increase of 5.0% from 18.4% in the year to June.  Business confidence in the country improved seven points to +4 in July, but business conditions worsened two points to negative 3.

The U.S. is scheduled to release retail sales, producer prices, business inventories, small business sentiment (NFIB index), the IBD/TIPP optimism index, and weekly chain store sales figures.  Political pundits continue to debate whether the choice of Paul Ryan by Mitt Romney helps or hurts his chances.  One thing that is clear is the selection is a polarizing step.  The Romney/Ryan made critical comments already about the usefulness of quantitative easing from the Federal Reserve, this as the annual Jackson Hole central banking conference nears.  Jackson Hole has been a venue that Chairman Greenspan has in the past used to introduce policy initiative.  Ryan, like Ron Paul who wants to abolish the Fed, is a fervent believer in the teachings of Ayn Rand.  So for that matter is Alan Greenspan, Ben Bernanke’s predecessor.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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