End of August

August 31, 2016

Investors are less worried about European growth and more confident the Fed will lift rates soon at the end of the month than they were at the start of August. A lot of data was released on this final trading session of the month.

The dollar is down 0.4% against sterling. Britain’s Nationwide house price index rose 0.6% on month in August and 5.6% on year, both constituting 5-month highs. Consumer confidence in the U.K. rebounded five points to a reading of negative 7 in August. Brexit isn’t exerting as big a near-term shock on psychology as feared initially.

The dollar is unchanged against the euro. The 10-year German bund yield edged a basis point higher. The Dax is 0.1% softer.

  • One ECB official, Praet, defended monetary stimulus.
  • Eurozone unemployment remained at 10.1% in July, same as in the three prior months but 0.7 percentage point less than a year earlier.
  • Ezone CPI inflation stayed at 0.2% in August, the third straight reading above zero. But core dipped to 0.8% from 0.9% in both July and August 2015.
  • German retail sales volume recovered 1.7% in July, much more than forecast.
  • The German jobless rate stayed at 6.1%. The number of unemployed workers fell 7K, matching the average drop in the prior two months. Job vacancies continue to increase, and employment grew 1.2% on year.
  • French inflation was at 0.2% in August. French consumer spending only rose 0.5% in the year to July, less than expected.
  • Italian consumer prices dropped 0.1% in the year to August. Core inflation slowed to 0.4%.

The dollar rose 0.2% against the yen, but the Nikkei advanced 1.0% on speculation the BOJ will augment monetary stimulus in September.  The JGB yield on 10-year notes rose a basis point.

  • Japanese industrial production was flat in July and 3.8% lower than a year before.
  • Motor vehicle production in July was 4.1% less than a year earlier.
  • Japanese small business sentiment fell 1.5 points to a 3-month low of 46.3 in August.
  • Housing starts posted on-year growth in July of 8.9%, but construction orders plunged 10.9%.

The dollar slipped 0.4% against the Aussie dollar and is 0.1% softer vis-a-vis the kiwi.

  • Aussie private credit grew 6.0% in the year to July, down from 6.2% in June.
  • New Zealand business sentiment weakened to 15.5 in August from 16.0 in July and 20.2 in June.

The dollar is 0.1% firmer against the Swiss franc.  The UBS Swiss consumption indicator printed at a weak 1.32 in July.

WTI oil fell 0.7% to $46.04 per barrel. Comex gold is up 0.7% at $1,317.20 per ounce.

A new poll gives Clinton a narrower lead over Trump in the U.S. presidential sweepstakes.

The U.S. releases pending home sales, the ADP estimate of private employment, and the Chicago PMI.

Canadian GDP figures arrive today as well, and central banks in Brazil and Colombia are holding interest rate policy meetings.

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

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