Dollar Little Affected by Risk Aversion in Other Markets

April 20, 2016

Stocks in China, Hong Kong and Taiwan slumped 2.3%, 1.5%, and 1.4%.  A Chinese central bank official implied lessening inclination to ease.

West Texas Intermediate crude oil dropped 2.3% to $40.14 per barrel on news that Kuwaiti workers called off their strike.

The 10-year Japanese JGB yield dipped another basis point to a record low of -0.15%.  !0-year German bund and British gilt yields are two basis points lower.

Share prices elsewhere rose 1.1% in Japan and 0.6% in Australia but are down 0.3% in the U.K., 0.2% in Switzerland and Greece but up 1.2% in Spain and 0.1% in Germany.

Japan’s customs trade surplus in March — JPY 755 billion unadjusted and JPY 277 billion seasonally adjusted — was smaller than forecast on weak exports.  Exports fell 6.8% on year versus a 4% on-year drop in February.  Imports declined 14.9% after a February plunge of 14.2%.  A 21.2% on-year March drop in Japanese machine tool orders was confirmed by final data.  This was similar to February’s decrease of 22.5%.

Bank of Japan Governor Kuroda implied rising sentiment to initiate further monetary stimulus including an even more negative interest rate, and he insisted that the weekend statement from G20 central bankers and finance ministers would not limit the BOJ efforts to secure higher inflation.  ECB President Draghi speaks publicly today as well, and the ECB Governing Council holds a policy meeting tomorrow.

The dollar rose 0.2% against the yen and 0.1% versus the yuan, sterling and the loonie.  A bigger 0.5% advanced was scored against New Zealand’s kiwi, but the dollar slipped 0.1% relative to the euro and is unchanged vis-a-vis the Swiss franc and Aussie dollar.

Gold edged down 0.2% to $1,247.38 per ounce, but silver firmed.

German producer prices were unchanged on month in March, but the 12-month 3.1% drop was the largest on-year decline since January 2010.  Non-energy PPI deflation increased to -0.9% from -0.7% the month before.

The latest batch of British labor statistics produced an unexpected 6.7K rise in the claimant count of unemployed workers in March.  This followed a 9.3K drop in February.  The ILO-basis unemployment rate held steady at 5.1% in the three months to February, but wage inflation decelerated to 1.8% overall in December-February.  Regular pay recorded a 12-month rise of 2.2%, same as in November-January.

Iceland’s wage cost index posted a larger 13.3% jump in the year to March.

The Swiss ZEW sentiment index improved to a reading of 11.5 in April from 2.5 in March and -5.9 in February.

Dutch consumer spending grew only 0.1% on year in February, the worst outcome since September.  Consumer sentiment in April, however, improved five points to +1.0.

Australia’s Westpac index of leading economic indicators printed at -0.12 in March following readings of -0.23 in February and +0.12 in January.

Among price data released earlier today,

  • South African overall CPI inflation settled back more than forecast to 6.3% in March from a 6-year high of 7.0% in February.  Core CPI fell to 5.4%.
  • Malaysian CPI inflation slowed to 2.6% in March from 4.2% in February.  Consumer prices fell 0.6% on month.
  • South Korean producer prices dropped 0.1% on month and 3.3% on year in March.

A 1.3% rise in U.S. mortgage applications reflected greater refinancings.  The 30-year fixed mortgage rate edged up a basis point to 3.83%.  U.S. existing home sales data are due later today.  So are Canadian wholesale sales and the latest interest rate decision from Turkey’s central bank.

On the U.S. presidential primary trail, Tuesday’s New York vote produced expected wins for Trump and Clinton.

  • Trump took 60.5% of the state’s popular vote and 89 of 92 delegates that were at stake.  He has accumulated 847 committed delegates but needs 1.237 to get the nomination.  His main opponent Cruz won just 14.5% of the vote.
  • Clinton in the Democratic Party race won 57.9% of the popular vote, which translated into 135 of 239 delegates at stake.  She has 1,924 delegates thus far including super-delegates and only needs to get 2,383 to secure a majority.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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