Dollar Opens Holiday-Abbreviated Week With a Bid Tone

November 23, 2015

Japan’s market was shut today for the Labor Thanksgiving holiday, and U.S. market leadership will be missing later in the week.  Not much data were reported overnight, but the release of U.S. existing home sales, the Chicago Fed National Activity Index, the FHFA house price index, and preliminary U.S. PMI findings compiled by Market Economics are on tap for later in the day.

Commodity prices weakened.  West Texas Intermediate crude oil slumped 3.1% to $40.59 per barrel.  Comex gold is 0.8% softer at $1,069.85 per ounce.

The dollar strengthened 1.0% against the kiwi, 0.7% relative to the Australian dollar, 0.4% versus sterling, 0.3% vis-a-vis the loonie and Swiss franc, 0.2% against the yen and euro and 0.1% against the yuan.

Share prices fell 0.6% in China, 0.5% in Singapore and 0.4% in Indonesia but rose 1.2% in New Zealand, 0.7% in South Korea, and 0.4% in Australia.  Stocks in Europe so far have dropped by 1.0% in France, 0.7% in the U.K., 1.2% in Switzerland, 0.5% in Germany and 0.4% in Spain, but Italy’s market improved.

10-year sovereign debt yields rose three basis point in the U.K. and a single basis point in Germany.

Today’s data highlight has been preliminary eurozone, German and French purchasing manager surveys for November.

  • Euroland’s composite PMI rose 0.5 points to a 54-month high of 54.4, suggesting stronger GDP growth this quarter than seen the third quarter.  Jobs and orders expanded at the fastest pace since May 2011.  Growth was generated more strongly in services than manufacturing.  The services PMI printed at a 54-month high of 54.6, while the manufacturing PMI reading of 52.8 was at a 19-month high.  Improvement was most pronounced in countries other than the big two, Germany and France.
  • The German composite PMI rose 0.7 points to a 3-month high of 54.9, with manufacturing (52.6, a 3-month high) trailing services, which printed at a 14-month high of 55.6.
  • The French composite PMI score, a 3-month low of 51.3, indicated slower expansion in November than in October (52.6) or September (51.9).  While the manufacturing PMI rose 0.2 points to a 19-month high of 50.8, the services component fell 1.4 points to a disappointing 51.3, which is a 3-month low.  Service sector activity dropped immediately after the November 13 attacks in Paris.

German Bundesbank President Weidmann made predictably hawkish comments over the weekend.  Neither his reluctance to ease policy further nor better-than-forecast eurozone PMI readings are likely to prevent the central bank from authorizing an increase in asset purchases and/or a cut of the deposit rate at its December Governing Council meeting.

By a vote of 51.5/48.5%, Argentine voters on Sunday rejected the anti-business policies of the prior fourteen years, electing Mauricio Macri, who has promised to reverse many of the policies of the Kirchner era.

Consumer prices in Singapore and Hong Kong respectively fell 0.8% and rose 2.4% during the twelve months to October.  The drop in Singapore exceeded expectations, as did the price rise in Hong Kong.

Taiwan’s jobless rate held steady at 3.79% in October.  Taiwanese retail sales were only 0.6% higher than a year earlier, however.

Swiss M3 money growth edged up 0.1 percentage point to 1.4% last month.

Aside from the aforementioned U.S. data releases, John Williams, president of the San Francisco Fed Bank, will be speaking publicly today.

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

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