A Slew of Market Factors this Friday
August 7, 2015
The dollar has risen 0.4% against the euro, loonie and sterling. It got a boost from the monthly Labor Department jobs report, which showed
- Unchanged unemployment (5.3%), participation rate (62.6%), and jobs-to-population ratio of 59.3%.
- The creation of 215K nonfarm payroll jobs last month, slightly less than forecast, but a combined 14K upward revision to job gains in May-June.
- A 0.1 percentage point dip to the broad measure of un- and underemployment to 10.4% from 10.5% in June and 10.8% in May.
- A respectable 15K rise in manufacturing jobs.
- A rise of 0.1 in the average number of weekly hours worked to 34.6 hours.
- On-year growth in average hourly earnings of 2.1%, which is less than expected but between May’s 2.2% and June’s 2.0%. The month-on-month increase was 0.2%.
The dollar is unchanged against the yen and yuan, up 0.1% versus the kiwi and Swiss franc and off 0.1% relative to the Australian dollar.
Stock markets opened lower in the U.S. and Canada. Share prices fell 0.9% in China, 1.1% in New Zealand and Taiwan, 0.8% in Indonesia and 0.2% in India and South Korea. The Australian market slumped 2.4%, while Japan’s Nikkei closed 0.3% higher. Stocks in Europe are up further in Greece but down 0.4% in Spain and 0.2% in France, Germany and Switzerland.
Among commodities, Comex gold is off 0.3% at $1,089.19 per ounce. WTI crude oil fell 0.5% to $44.42 per barrel.
The ten-year British gilt and Japanese JGB yields are down by 3 and 1 basis points, while the U.S. Treasury and German bund yields remain unchanged.
The Bank of Japan’s August Board meeting issued an almost identical statement to that from July. A virtual zero interest rate policy continues, enforced by quantitative and qualitative stimulus that is buying 80 trillion JGBs per month. The economic assessment that looks for moderate recovery and zero inflation for a while before acceleration toward the 2% target was unchanged except for a minor upgrade to the view on housing. In Q&A, Governor Kuroda denied that the BOJ is targeting the yen but implied a growing policy guidance role for the consumer price measure that excludes energy as well as fresh food. Kuroda remains confident that the current policy stance is appropriate and ample to get boost inflation eventually to 2%.
The Reserve Bank of Australia published its quarterly Monetary Policy Statement, which presents an upbeat view of gradually improving growth ahead and a lower peak in unemployment than envisaged before. The report nonetheless defends interest rate levels as appropriate.
Industrial production was reported by a number of countries.
- German IP fell 1.4% on month in July, sharply missing forecasts of a slight rise. Output of capital goods slumped 2.6%. Overall industrial production recorded on-year growth of 0.6%, down from 2.4% in June.
- French industrial output dipped 0.1% in July, also missing forecasts and resulting in a 12-month 0.6% rate of increase.
- Spanish IP rose 0.4% on month and accelerated to a 4.5% 12-month rate of rise.
- In The Netherlands, an energy producer and exporter, output fell 0.3% on month but climbed 3.6% on year.
- Norwegian factory output edged 0.1% higher on month but fell 3.7% on year.
- Turkish industrial production increased 2.4% on month in June, reversing a 1.9% drop in May. A 5.5% on-year advance was the most in 17 months.
- Hungarian output jumped 1.1% in June and 6.0% from a year earlier.
German and British trade figures for June were reported. First Germany where seasonal strength widened the surplus to EUR 24.0 billion from EUR 19.8 billion in May and EUR 16.2 billion the year before. The seasonally adjusted surplus edged down a bit to EUR 22.0 billion, matching the 2Q mean but exceeding the averages of EUR 19.8 billion per month in 1Q, EUR 18.1 billion in 2014 and EUR 15.8 billion in 2013. The current account surplus in June was EUR 24.4 billion versus EUR 16.9 billion in June 2014. There was a EUR 114.6 billion current account surplus in the first half of 2015, 22% wider than a year earlier. One dark note was month on month declines in exports of 1.0% and imports of 0.5% in June.
Britain’s goods and services trade deficit rose less than forecast to GBP 1.601 billion in June, resulting in a GBP 4.8 billion deficit last quarter, smallest in four years. The merchandise trade shortfall of GBP 9.184 billion was balanced with a GBP 7.6 billion services surplus.
Swiss unemployment held steady last month at 3.1% (3.3% seasonally adjusted).
Canada’s monthly labor force survey showed continuing weakness. The jobless rate held at 6.8% in July, and a 6.4K rise in employment merely offset a 6.6K drop in the previous month. Labor participation of 65.7% was lower than expected. in a separate report, building permits posted a greater on-year drop of 3.8% in June despite a double-digit monthly increase. Such had fallen 2.9% in the year to May. Finally, the IVEY-PMI index for Canada fell three points to 52.9 on a seasonally adjusted basis in July.
Greek consumer prices fell 2.2% in the year to July (1.3% on a harmonized basis). Greek import prices were 10.5% lower in June than a year earlier, and that month again saw the Greek trade deficit exceed EUR 1.0 billion.
A Bank of England policymaker made remarks that interest rates do not need to rise yet.
Australia’s construction purchasing managers index printed for a fourth straight month below the 50 threshold between expanding and contracting activity. Such was at 47.1 in July, higher than June’s 46.4 but lower than May’s 47.8. Home loans in Australia rose 4.4% in June after falling 6.1% in May.
Japan’s trade balance recorded a JPY 102 billion surplus in the first twenty days of July versus a JPY 530 billion deficit a year earlier, as imports plunged 10.2% and exports rose 4.2%. Japanese international reserves declined $619 million last month on top of losses amounting to $2.82 billion in June and $4.32 billion in May.
Brazilian CPI inflation accelerated to 9.6% in July from 8.9% in June. Real weakness is generating inflation.
The French trade deficit of EUR 2.658 billion in June was 99-month low and 52% narrower than the EUR 5.53 billion shortfall in June 2014.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German industrial production and current account, U.S. nonfarm payroll jobs