Currency Markets Stabilize Ahead of U.S. Jobs Report

September 5, 2014

In contrast to yesterday’s sharp advance, the dollar overnight was on balance unchanged against the loonie, kiwi, yuan, and yen — but not before breaking through a key support to a 6-year peak of JPY 105.72 earlier.  The dollar’s down 0.1% versus the Swissie and euro (after an overnight high of 1.2922 per EUR) and off 0.2% relative to the Aussie dollar.  There’s been a 0.1% uptick against sterling.

Like German industrial orders reported Thursday, industrial production rebounded in July from a sharp drop in June.  Output was 1.9% higher on month and 2.5% stronger on year in July, paced by a 5.0% jump in production of capital goods.

Euro area GDP was confirmed to have been unchanged in the second quarter and just 0.7% above the level in 2Q13.  Inventories exerted a 0.2 percentage point drag on growth last quarter, offsetting a similar positive contribution from a 0.2% rise in personal consumption.  The effects of investment (down 0.1 percentage point) and net foreign demand similarly offset one another, and government spending was flat.   Quarter-over-quarter growth rates amounted to 0.6% in Portugal, 0.5% in the Netherlands, and 0.1% in Belgium but zero in France and negative 0.2% in Germany and Italy.  On-year growth ranged from 1.3% in Germany to negative 2.5% in Cyprus.

French consumer confidence stagnated in August at July’s low level of 86.

British expected 1-year inflation rose 0.2 percentage points last month to 2.8%.

Swiss industrial production growth accelerated in 2Q, rising 3.1% from 1Q and 5.1% on year.  Swedish industrial production sank 5.7% in the year to July.  Norwegian output fell by 2.8% in the same twelve month period, and Danish production fell by 5.4%.  Finnish GDP rose 0.2% on quarter but was 0.1% lower in 2Q14 than 2Q13.

Minneapolis Fed President Kocherlakota made predictably dovish remarks overnight, predicting inflation below 2.0% until 2018 and calling interest rates too high.

Japanese international reserves climbed $1.984 billion in August after falling by $7.894 billion in July.  Japan’s index of leading economic indicators edged higher to 106.5 in July from 105.9 in June and 104.8 in May.  However, the index of coincident economic indicators slid another 0.3 points and was classified as still in a “weakening” trend.

Taiwanese CPI inflation rose to 2.1% in August from 1.8% in July.  Austrian wholesale prices posted a larger 1.6% on-year decline in August.

Australia’s construction PMI advanced to a 9-month high of 55.0 in August from readings of 52.6 in July, 51.8 in June, 46.7 in May, and 45.9 in April.

The 10-year British gilt yield is a basis point higher, while the equivalent Japanese JGB is a basis point lower.

Chinese stocks rallied 1.0%.  The Nikkei closed down 0.1%, and stocks have slipped by 0.3% in France, 0.2% in Italy, and 0.1% in Germany.

Canada and the U.S. monthly labor force surveys arrive today, as do Canadian productivity, unit labor costs, and IVEY-PMI index.  The Bank of Mexico announces its latest interest rate decision.

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

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