Dollar Little Changed Ahead of Draghi Monthly Press Conference

November 6, 2014

The dollar is up 0.2% versus sterling and 0.1% relative to the loonie, unchanged against the kiwi and yuan, and down by 0.3% against the euro, 0.2% vis-a-vis the Swissie and Aussie dollar, and 0.1% relative to the yen.

South Korean officials complained about the recent weakening trend of the yen and said more would be done to cap won appreciation versus Japan’s money.

Market attention is fixed on the ECB.  Will it cut rates or announce quantitative easing?  What will be Weidmann’s response if more easing is undertaken?

In the meantime,

  • The Bank of England’s Monetary Policy Committee made no policy changes and revealed nothing about the meeting’s discussion.  Minutes are due November 19, and a quarterly Inflation Report with new macro forecasts is due November 11.
  • The Czech 2-week repo rate was left at 0.05%.  The cap on kurona appreciation of 27 per euro will be maintained into 2016.
  • Bank Negara Malaysia retained a 3.25% operating policy rate as expected.
  • Minutes from the BOJ’s October 6-7 Board meeting expressed mounting concern that inflation could drop beneath 1%.  Later last month, a decision was taken by a 5-4 vote to amp up quantitative easing.

Share prices in the Pacific Rim fell 0.9% in Japan, 0.8% in Taiwan, 0.6% in Indonesia and 0.2% in Australia and Hong Kong.  The German Dax is up 0.3%, while the IBEX and Paris Cac gained 0.2%.  The British Ftse is steady.

The 10-year British gilt slid two basis points, while its Japanese counterpart is 3 basis points firmer.  The German bund is steady.

Gold and oil prices dipped 0.1% to $1,145.10 per ounce and 0.3% to $78.45 per barrel.

German industrial orders rounded just 0.8% in September following a 4.2% plunge in August.  Orders were 1.0% lower than a year earlier.  Domestic capital goods orders, a forerunner of business investment, dropped 3.4% on top of August’s 1.0% decrease.  The data are weaker than anticipated.

Euroland’s retail purchasing managers index recovered 2.2 points to a 3-month high of 47.0 in October.  That’s still south of 50, connoting a contraction of activity only at a slower pace.  The French, German and Italian retail PMIs toched 4-,3-, and two-month highs.

Germany’s construction PMI improved 1.5 points to a 7-month high of 51.5.

British industrial production rose 0.6% in September, more than forecast, but the 12-month rate of advance dropped from 2.2% in August to 1.5%.  U.K. car sales were 14.2% greater in October than a year earlier versus a 5.6% increase registered in September.

According to JP Morgan’s compilation, the global composite PMI dropped a full point to 53.6 in October, and the global services PMI fell by 1.5 points to a reading of 53.7.

Russia’s composite PMI fell to a 5-month low of 49.1 from 50.9.  In October, the services PMI also hit a 5-month low, 47.4.

Japan’s index of leading economic indicators climbed 1.2 points in September.  More importantly, the index of coincident economic indicators gained 1.4 points to 109.7, enough for officials to suggest the data are signaling a possible turning point.

Australian employment rebounded 24.1K in October, somewhat more than forecast, after dropping by a downwardly revised 23.7K in September.  Unemployment held at 6.2%, and the participation rate of labor edged up 0.1 percentage point from September’s 8-year low of 64.5%.

Thai consumer confidence rose 1.9 points to a score of 80.1 in October.  Swiss consumer confidence weakened 10 points to a minus 11 reading in September.

The Czech trade surplus increased more sharply than forecast in September to CZK 19.29 billion, and industrial output that month posted a 4.5% increase.

Dutch consumer prices were 1.1% higher than a year before in October, whereas consumer prices in Cyprus posted a 0.5% on-year decline.

THIS JUST IN:  ECB interest rates, which had been cut by 10 basis points in September, were left unchanged for a second straight time.

Still to come: Draghi’s press conference and the release of U.S. productivity and jobless insurance claims.

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

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