New Zealand Dollar Volatility and Some Interesting Data Reports

October 14, 2015

A speech by Governor Wheeler of the Reserve Bank of New Zealand whip-sawed the kiwi.  The currency initially fell 0.4% to as low as USD 0.6619 when the central bank head indicated that the Official Cash Rate probably will fall further, contingent on future economic news, but it then roared back to USD 0.6726, a net overnight advance of 1.2% when Wheeler expressed concern about the effect low interest rates could have on housing demand, expressed a desire to be in position to ease policy if and when global demand slows, and generally signaled no urgency to cut the OCR very soon.

The U.S. currency suffered overnight losses as well of 0.7% against sterling, 0.2% versus the yen, euro and Aussie dollar, and 0.1% relative to the loonie and Swiss franc.  The Chinese yuan held steady.

European and Asian share prices extended Tuesday’s losses.  Equities are so far down 1.1% today in Germany, 0.8% in France and the U.K., 0.6% in Spain, 0.7% in Italy and 0.3% in Switzerland.  Japan’s Nikkei-225 tumbled 1.9% on top of Tuesday’s 1.3% decline and is again below 18K.  Stocks also lost 1.0% in Hong Kong, 1.1% in China, and 0.5% in Taiwan and South Korea.

Ten-year sovereign debt yields slipped four basis points in the U.K. and two bps in Germany while remaining at a mere 0.30% in Japan.

Gold and oil edged down 0.2% apiece to $1,166.26 per ounce and $46.59 per barrel.

Chinese CPI inflation fell back in September to July’s 1.6% level from 2.0% in August.  In a further display of extreme disinflation up the pricing pipeline, the PPI slumped 5.9% on year in the latest month, same as in August.

Industrial production in the eurozone fell 0.5% in August, including drops of 3.0% in energy and 1.0% in capital goods.  Output posted an on-year rise of 0.9%, half that seen during the year to August.  Production between July and August slid 1.5% in The Netherlands, 1.1% in Germany, 1.0% in Ireland and 1.3% in Spain.

British labor statistics showed an expected 4.6K increase in the jobs claimant count in September, lower-than-forecast on-year growth in June-August wage earnings growth of 3.0% for total compensation and 2.8% in regular pay, and a dip in the ILO-basis jobless rate to 5.4% in June-August, lowest since mid-2008.

The 12-month decline in Indian wholesale prices narrowed to 4.54% in September from 4.95% in August in spite of a larger 17.7% plunge in fuel.

Japanese corporate goods prices posted a fourth straight month-on-month decline in September, this time of 0.5% that resulted in a 3.9% 12-month rate of decline.  In the year to September, export prices dropped 6.6% versus a decline of 1.1% in the previous twelve months, and import prices plunged 21.0% versus a prior slide of 1.3%.

Japanese M2 money growth slowed to 3.8% in September, a 5-month low, from 4.2% on year in August, and broad liquidity grew 4.2%, down from 4.7%.  The Bank of Japan targets growth in the monetary base but rarely cites money expansion in explaining policy.  The BOJ balance sheet rose to 369.1 trillion yen on October 10 from JPY 365.4 trillion at end-September and JPY 345.4 trillion at mid-2015.

The Conference Board’s Japanese leading and coincident indices of economic indicators respectively rose 0.2% and fell 0.1% in August.  South Korea’s LEI and index of coincident indicators dropped 1.2% and firmed 0.2% in August.

After falling 5.6% in September, the Westpac index of Australian consumer confidence recovered 4.2% this month from a reading of 93.9 to one of 97.8, which still conveys slightly more pessimists than optimists.

The ZEW index of investor sentiment toward Switzerland jumped to a 19-month high of 18.3 in October from 9.7 in September and 5.9 in August.

In the year to September, consumer prices were unchanged in France, down by 0.6% in Finland and 0.9% in Spain, and a mere 0.2% higher in Italy.  Greek import prices plunged 12.8% between August 2014 and August 2015.

Industrial production in Hungary was 6.2% greater than a year earlier in August, matching a preliminary estimate.  The Czech current account deficit of CZK 740 million in August was considerably smaller than July’s deficit of CZK 21.5 billion.

U.S. mortgage applications imploded 27.6% last week, reversing a 25.5% surge in the prior week. The 30-year fixed mortgage rate held steady at 3.99%.

Hillary Clinton seemed to win last night’s debate of Democratic candidates for president.  But her 2007-08 successes in debates did not translate into greater voter support.

Scheduled U.S. data releases today included producer prices, retail sales, business inventories and the Fed Beige Book of regional economic trends.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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