Firmer Dollar and European Share Prices

June 19, 2014

Investors perceived a dovish message in Janet Yellen’s press conference yesterday.  The Swiss and Norwegian central bank statements fortified that risk on mood.

Share prices have climbed 1.6% in Japan and Australia, 1.1% in Italy, 0.9% in Spain and France, and 0.8% in Britain and Germany.  China’s market fell another 1.5%, however.

The dollar has risen 0.4% against the Swiss franc, 0.3% versus the euro, 0.2% relative to the loonie, Aussie dollar and sterling and 0.1% vis-a-vis the yen.  The kiwi and yuan are unchanged.

Ten-year sovereign debt yields have slipped by five basis points in Britain, three basis points in Germany and a single basis point in Japan.

Commodities strengthened.  The prices of gold and West Texas Intermediate oil climbed 0.7% to $1,282.10 per ounce and 0.5% to $106.45 per barrel.

Norway’s central bank retained a 1.5% benchmark interest rate and indicated that the policy rate would likely stay at that or a lower level for a longer time, namely to the end of 2015.

The Swiss National Bank’s quarterly policy review retained the 0.0-0.25% 3-month Libor rate target and the 1.2000 franc per euro ceiling rate to be enforced with intervention if needed.

An official at the Bank of England stressed that interest rate hikes would not necessarily happen right away and that the process would be gradual.

An official at the German Bundesbank endorsed the easing steps of the European Central Bank taken earlier this month.

The Vietnamese dong has been devalued by a slight 1%.  The last adjustment occurred a year ago.

The Filipino central bank unexpectedly lifted its Special Deposit Account rate to 2.25% to counter fast growth in liquidity but left its benchmark overnight rate at 3.5%.

Japan’s all industry index, a monthly supply-side proxy of GDP, plunged 4.3% in April after climbing 1.6% in 1Q.  The index was 3.7% lower than the 1Q mean and down 1.1% on year.

Japan’s index of leading economic indicators in April was revised down 0.1% to a reading of 106.5.  Such was at 107.4 in March and 108.8 in February.  The coincident index dropped 3.6 points.

New Zealand experienced its fastest growth last quarter since 2007.  Led by construction, GDP went up 1.0% from 4Q13 and by 3.3% on year.

Producer prices in South Korea were unchanged on year in May.  That was the first non-negative on-year change in almost two years.

British retail sales contracted 0.5% in May, cutting the 12-month increase to 3.9% from 6.5%.  Core retail sales also dropped 0.5% on month while rising by 4.7% on year, down from 7.4% in April.  According to the Confederation of British Industries, the industrial trends survey index rebounded from zero in May to a 6-month high of +11 in June.

South African wholesale turnover increased 1.1% in April but posted a 0.7% 12-month decline.

Scheduled U.S. data to be released today are the index of leading economic indicators, the Philly Fed manufacturing index and weekly jobless insurance claims.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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