A Lot to Ponder in Spite of U.S. and British Holiday Closures
May 30, 2016
U.S. markets will be closed for Memorial Day, the unofficial start of summertime currency trading. London markets are shut, too, for the late May Bank holiday.
At the summit of G7 leaders held in Japan, a mixed agreement was reached not to engage in competitive devaluation but also protesting excessive exchange rate volatility. Japan’s prime minister worried aloud about a risk of a global recession unless appropriate policies (meaning stimulus) are not deployed, but the group merely instructed each country to tailor its response to its own circumstances.
Janet Yellen’s speech on Friday left the possibility of a June rate hike in play, depending on forthcoming data, and indicated a probable rate hike no later than July.
A spokesman for Japan’s government unofficially indicated that the consumption tax hike planned for April 2017 will be delayed a second time. No official clarification of when such may occur has been made, but the yen fell 0.7% against the dollar in response.
Economic sentiment in the eurozone increased 0.7 points to a 4-month high of 104.7 in May. Sentiment in retail was at a 6-month high. Consumer confidence rose to a 4-month high, but industrial confidence was unchanged, and services dipped to a 2-month low. Construction sector confidence was at a 3-month peak, and the overall business climate index improved from 0.15 to a 4-month high of 0.26.
Swedish GDP growth slowed to a 6-quarter low in the first quarter of 0.5%. On-year growth was 4.2%, revised downward from 4.5% reported originally.
The drop in Greek GDP last quarter was revised to 0.5%, marking a third contraction in a row. GDP was 1.4% lower than a year earlier.
French real GDP growth in the first quarter was revised upward to 0.6% on quarter and 1.4% on year, led by gains of 1.0% in personal consumption and 2.4% in business investment.
French consumer spending dipped 0.1% in April but surpassed the April 2015 level by 2.5%.
In the year to April, Portuguese retail sales and industrial production climbed by 2.9% and 3.5%. Portuguese consumer sentiment strengthened 0.5 points to a May reading of -11.9.
Spanish consumer prices in May rose 0.5% on month but fell 1.1% on year.
Japanese total retail sales were unchanged on month in April and 0.8% lower than a year earlier.
New home sales in Australia dropped 4.7% in April, partly reversing March’s increase.
German import prices dipped 0.1% on month and fell 6.6% on year in April. These results showed weaker imported price pressure than forecast in spite of a rise in energy. However, preliminary state consumer price data for May suggest a bump upward in inflation that month.
In the year to April, producer prices plunged 10.2% in Greece. Such fell 4.1% in Italy and 3.0% in Austria. Austria’s manufacturing purchasing managers index was 52.0 in May, same as April’s level after scores of 51.2 in January, 51.9 in February and 52.8 in March.
The dollar is down 0.2% against the euro and Swiss franc, unchanged versus the kiwi and sterling but up 0.1% vis-a-vis the Canadian Australian dollars. Emerging market currencies are softer, especially the South Korean won.
Ten-year sovereign debt yields firmed two basis points and one basis point in Germany and Japan.
Gold briefly dipped below the $1,200 level. WTI oil is 0.2% softer at $49.24 per barrel.
Share prices in the Pacific Rim rose 1.4% in Japan, 0.9% in Taiwan, 0.4% in Hong Kong and Indonesia and 0.3% in India. In Continental Europe, share prices climbed 0.9% in Greece, 0.5% in Italy, and 0.4% in Germany.
Another Colombian central bank rate hike was announced late Friday. The rate now stands at 7.25%, up from 4.5% at the start of last September.
Canadian producer prices fell 0.5% on month in April but recorded a smaller on-year decline of 1.5%. Energy went up 2.2% on month. Canadian raw material prices posted a 12.5% drop between April 2015 and April 2016. Canada’s current account deficit increased 6.8% last quarter to C$ 16.773 billion from C$ 15.711 billion in 4Q15 and a quarterly average in 2015 of C$ 15.658. In 2014, Canada had a surplus of C$ 4.79 billion. Canadian trade has been squeezed by lower energy export prices and previous strength in the Canadian dollar.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Canadian current account, eurozone economic sentiment, French GDP, Japanese retail sales