Stronger New Zealand Dollar

August 23, 2016

Several currencies strengthened against the U.S. dollar, led by the kiwi and not including the euro. The greenback lost 0.7% against the New Zealand dollar, 0.3% relative to the loonie, yen and sterling, and 0.1% versus the Aussie dollar and yuan, but it gained 0.3% against the euro and is unchanged against the Swiss franc.

Share prices rose 0.7% in Australia, 0.6% in Taiwan, 0.4% in South Korea and 0.2% in China but fell 0.6% in Japan, 0.4% in Hong Kong and 0.2% in Indonesia. European stocks have climbed 1.4% in Italy, 1.1% in Greece, 0.9% in Spain and German y, 0.7% in France, 0.6% in Great Britain and 0.5% in Switzerland.

West Texas Intermediate crude oil fell 0.9% to $46.97 per barrel.  Gold is pretty steady at $1,344.20 per ounce.

Ten year British gilt and German bund yields are up by two and one basis points. The 10-year Japanese JGB yield is two basis points further below zero at -0.11%.

Preliminary purchasing manager survey results in August were reported for the eurozone and Japanese manufacturing.

  • Japan’s factory PMI rose to a 6-month high of 49.6 from 49.3 the month before. It was the slowest rate of contraction in this half-year period.
  • Euroland’s composite PMI edged up 0.1 point to a 7-month high of 53.3. While services improved to a 3-month high of 53.1, manufacturing fell to a 3-month low of 51.8. The data suggest that Euroland real GDP likely advanced 0.3% (1.2% annualized) in the summer quarter. This is a bit better than analysts anticipated.
  • But Germany’s PMI data were not as strong as forecast. The composite German purchasing managers index fell to a 2-month low of 54.7 in August from 55.3 in July and including a 15-month low in services and a 3-month low in manufacturing.
  • The French composite PMI of 51.6 in August was at a 10-month high and suggests positive GDP growth this quarter after no growth in the spring. Services printed at a 10-month high of 52.0, while manufacturing dipped to a 2-month low of 48.5.

Reserve Bank of New Zealand Governor Wheeler gave a speech that indicated the possibility of additional monetary stimulus also argued against a string of rate cuts. The kiwi was lifted by his rejection of that option.

Australia’s indices of leading and coincident economic indicators rose 0.1% and 0.2% in July. South Africa’s indices of leading and coincident economic indicators advanced 0.9% and 0.7% in June.

China’s business sentiment index dipped to 54.3 in August from a reading of 55.5 the month before.

The Swiss trade surplus of CHF 2.93 billion in July was down from CHF 3.51 in June and at a 3-month low.

Mexican real GDP slipped 0.2% in the spring quarter but was 2.5% greater than a year earlier.

Danish consumer confidence rose to a 4-month high of 4.8 in August.  Turkish consumer sentiment also improved in August, which had not been expected.

Finnish unemployment stayed at 8.9% seasonally adjusted in July but fell to a 23-month low not adjusted. Icelandic wage inflation slowed to 11.3% in July. And Irish producer prices were 1.3% lower than  in July 2015.

Central bank meetings are taking place today in Hungary and Turkey.  The annual Jackson Hole Symposium on central bank issues starts Thursday. The key address there will be delivered Friday by Fed Chair Janet Yellen.

U.S. new home sales and the Richmond Fed manufacturing index will be reported today.

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

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