Better Session for the Dollar

January 18, 2017

Following sharp losses on Tuesday, the dollar prior to the release of U.S. CPI figures shows a recovery of 0.9% against sterling, 0.8% relative to the peso, 0.5% vis-a-vis the loonie and yen, and 0.2% versus the euro, Aussie dollar and kiwi. The yuan and Swiss franc remained steady.

Share prices in the Pacific Rim increased 1.2% in Hong Kong, 0.5% in Indonesia and 0.4% in Japan but fell 0.4% in Singapore and Australia.

Share prices in Europe have thus far declined 0.6% in France, 0.3% in Italy, and 0.2% in Spain and Switzerland. The German Dax is steady, and the British Ftse has edged up 0.1%.

Sovereign debt yields turned upward, with gains of two basis points in the 10-year British gilt and one basis point in German bunds and Japanese JGBs.

Comex gold is steady at $1,213.10 per ounce. West Texas Intermediate crude oil fell back 1.5% to $51.70 per barrel.

San Francisco Fed President Williams said he would like to see the Fed hike three times in 2017 even if fiscal policy stimulus doesn’t happen.

Chinese property prices rose by the most in five years during 2016, but upward pressure receded last month when only 46 of 70 cities experienced a monthly rise. That was the smallest number since January 2016. The house price index rose 0.3% on month and 12.4% on year. That was the third straight month with a greater than 12.0% on-year advance.

The World Economic Forum in Davos, Switzerland is in its second of four days. The head of the IMF hopes to see a more equitable distribution of global wealth.

The preliminary estimates of Eurozone CPI inflation were confirmed. Prices increased 0.5% on month and 1.1% on year in December. Inflation was up from 0.2% in the year to July-August but little changed from 1.0% in the year to December 2015. Comparisons of on-year inflation in December 2015 and 2016 showed increases from 0.2% to 1.7% in Germany, from minus 0.1% to +1.4% in Spain, from 0.3% to 0.8% in France, and from -0.2% to 1.1% in Finland. Core inflation last month was 0.9%, same as in December 2015, but energy, which had posted a 5.8% on-year drop in December 2015, recorded a 2.6% on-year increase in the latest month.

British unemployment claims fell 10.1K in December versus a 2.4K rise in November and expectations of another small increase. During the three months to November, regular pay growth was 2.8% greater than a year earlier. Compensation including bonuses rose by 2.7%. The ILO-basis unemployment rate in those three months averaged 4.8%.

Britain’s index of leading economic indicators was unchanged in November, while the index of coincident economic indicators rose by 0.2%.

Between end-2015 and last month, consumer prices climbed 6.8% in South Africa and 1.8% in Malaysia. South African retail sales grew 3.8% in the year to November.

The Westpac index of Australian consumer confidence recovered by a smaller-than-forecast 0.1% in January following a big drop in December.

Scheduled U.S. data releases today besides the CPI index include industrial production, capacity utilization, the National Association of Home Builders’ housing index, the Federal Reserve Beige Book and Treasury-compiled capital flows. Chair Janet Yellen speaks publicly.

The Bank of Canada Board will be announcing its latest monetary policy decision and releasing a new Monetary Policy Report today with updated forecasts.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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