Dollar Up and Some Eye-Catching Data Results
March 8, 2017
The dollar is trading higher, with gains of 0.6% against the Aussie currency, 0.5% relative to the yen, 0.4% versus the kiwi, 0.3% vis-a-vis the euro, loonie, peso and sterling, 0.2% against the Swiss franc, and 0.1% versus the yuan.
The ten-year Treasury yield rose another four basis points. At 2.56%, such is 25 basis points higher than the close on February 23. Ten-year German bund and British gilt yields climbed 4 and 3 basis points on the day.
Japan’s Nikkei lost 0.5%. The Hong Kong market rose 0.6%, but markets in India, Indonesia and China slipped 0.3%, 0.2% and 0.1%. Greek stocks jumped almost 2%, but markets in the U.K., Switzerland, Spain, Italy, France and Germany show little change in equities.
West Texas Intermediate crude oil fell a full 1.0% to $52.61 per barrel, and Comex gold is 0.3% softer at $1,212.60 per ounce.
Japan’s seasonally adjusted current account surplus fell to a 16-month low in January of JPY 1.26 trillion, as exports dropped 1.1% on month and imports rose 6.6%. The non-adjusted current account surplus was just JPY 66 billion versus JPY 590 in January 2016. The customs clearance trade surplus during February 1-20 was JPY 528 billion, nearly 800 billion better than the year-earlier deficit of JPY 266 billion.
Revised Japanese 4Q GDP figures show inflation adjusted annualized growth from 3Q of 1.2%, the same pace as last summer. GDP was 1.6% greater than a year earlier. Average growth in 2016 was just 1.0% after 1.2% in 2015. In just one of the past ten calendar years did real GDP rise as much as 2.0%, 2013, and that year’s result was just 2.0%. The GDP price deflator in 2016 rose a mere 0.3%, down from gains of 1.7% in 2014 and 2.0% in 2015. The deflator previously had posted fifteen straight calendar year declines through 2013.
Japan’s economy watchers index, a gauge of what service sector workers like taxi drivers are observing, fell to a 4-month low of 48.6 in February. Japan’s index of leading economic indicators increased 0.6 points to 105.5 in January. Although the index of coincident economic indicators fell 0.7 points to print at 114.9, officials said its trend continues to improve.
On-year growth in Japanese bank lending accelerated to 2.8% in February from 2.5% in October-January and 2.1% in the third quarter of 2016. There were 4.8% fewer Japanese bankruptcies in February than in the leap month of February 2016.
China’s trade balance had been widely projected to show a surplus of about $25 in February but instead swung to a $9.15 billion deficit from a $51.35 billion surplus in January and a surplus of $32.6 billion in February 2016. Imports surged 38.1% on year, and exports slipped 1.3% to produce this wholly unexpected deficit.
The 298K leap in U.S. private-sector jobs last month was more than 100K greater than generally assumed, which seemingly cements the case for a Federal Reserve interest rate hike next week.
One day before the second ECB Governing Council meeting of 2017, German industrial production was reported to have rebounded 2.8% in January and to have exceeded the fourth quarter’s average level by 1.3%. Still, output was unchanged from a year earlier. Spanish industrial production growth accelerated in January to an on-year increase of 2.5% from 2.0% the month before.
The French current account deficit catapulted to a much larger EUR 7.0 billion in January from EUR 1.2 billion in December.
Swiss consumer price inflation doubled to 0.6% in February, the greatest 12-month increase since mid-2011.
New Zealand’s quarterly activity index fell 1.8% in 4Q16, reversing a 2.1% rise in the third quarter.
Consumer confidence during February improved 1.6% in Indonesia but worsened 2.3% in South Africa.
The National Bank of Poland’s 7-day repo rate was left unchanged at 1.50%. The last change was a 50-basis point reduction in March 2015.
U.S. labor productivity rose 1.0% on year last quarter but just 0.2% in calendar 2016. Productivity growth in the five years through 2016 averaged just 0.5% per year, constituting one of the leading concerns in the current state of the U.S. economy. Despite weak productivity, unit labor costs were 2.0% higher last quarter than in 4Q15 and posted average growth of just 2.6% last year.
Canada also reported fourth-quarter productivity data, showing a quarterly increase of 0.4% and a 1.6% advance from a year earlier. Unit labor costs rose 0.7% on quarter and 0.6% on year.
Canadian housing starts rose 0.6% to 210.2K in February. Building permits went up 5.4% on month and 17.1% on year.
Last but hardly least, British Chancellor of the Exchequer Hammond will deliver the annual budget today. Once upon a time and before authority over monetary policy was handed over to the Bank of England, budget day in the U.K. was a huge deal for international economists. This will be Hammond’s first budget presentation and the first budget since the Brexit referendum. His challenge is to provide some stimulus to counter headwinds that will be unleashed by the U.K. leaving the EU but to not entirely abandon fiscal discipline.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.