Oil Under $50 and Gold Below $1,200 as U.S. Jobs Report Nears
March 10, 2017
A mixed overnight trading session finds the dollar up 0.4% against the yen and above the 115 level but down 0.3% to 1.0610 per euro. The dollar climbed 0.2% against sterling and 0.1% versus the Swiss franc but lost 0.4% to the peso, 0.2% against the Aussie dollar and 0.1% vis-a-vis the kiwi. The yuan is flat.
The beleaguered U.S. 10-year Treasury yield in futures is steady on the day at 2.60% but 29 basis points above its level two weeks ago. Ten-year German bund and British gilt yields are up 2 and 1 basis points ahead of the release of U.S. jobs data. A big increase is expected.
Japan’s Nikkei rebounded 1.5% overnight. Equities are up 0.6% in Australia and New Zealand, 0.5% in Singapore, and 0.3% in Hong Kong and South Korea. The bid tone has extended into European trading where equities have so far risen 1.0% in Italy, 0.6% in Germany and Spain, 0.5% in France, 0.4% in Britain and 0.2% in Greece.
Gold fell 0.4% to $1,198.8 per ounce, while WTI oil is 0.5% firmer but still under $50 at $49.53 per barrel.
Japan’s Ministry of Finance reported a 1.7-point drop in business sentiment this quarter among large firms. Another drop is projected in the spring before a summer recovery.
Germany’s current account surplus exhibited typical seasonal weakness in January, falling to EUR 12.8 billion, half of December’s EUR 24.8 level but not very much below EUR 14.6 billion posted in the first month of 2016. The seaonally adjusted trade surplus was EUR 18.5 billion after EUR 18.3 billion in December. The Trump administration’s trade czar, Navarro, has singled out Germany’s trade surplus for heavy criticism.
German labor cost inflation picked up to 3.0% on year in the fourth quarter from a 12-month increase of 2.3% in 3Q. However, labor cost growth of 2.5% in 2016 as a whole was less than 2.5% recorded in 2015 and the same as in 2014. German wholesale price inflation continues to rise sharply, posting an on-year 5.0% advance in February overall, thanks to a 20.7% leap in oil and solid fuels, which was their greatest 12-month increase since May 2010. The WPI on average fell 1.0% in 2016 and by 1.2% in both 2015 and 2014.
British industrial production dropped 0.4% on month in January after a 0.9% December rise. In November-January, increases of 1.9% from the previous three months and 3.3% from a year earlier were respectable and significantly better than the results in August-October. Construction output in the U.K. fell 0.4% on month but rose 2.0% on year.
British merchandise trade generated a GBP 10.83 billion deficit in January, 0.7% less than in December. The goods and services deficit slipped marginally below GBP 2.0 billion.
French industrial production slid 0.3% in January, defying expectations of a rise, and posted a 1.3% advance from a year earlier. Output in November-January was only 0.8% greater than a year earlier.
Spanish retail sales fell 1.1% in January and were essentially at the same level as a year earlier.
Singapore retail sales dropped 1.5% in January and rose 2.0% on year.
Peru’s central bank maintained a key interest rate of 4.25%, its level since a 25-basis point cut 13 months ago.
Both U.S. and Canadian labor market data arrive today. The FOMC meets next week and is widely expected to lift its federal funds target and indicate scope for possibly more rate increases this year than imagined a while ago. The self-imposed deadline for British Prime Minister May to invoke Article 50, which starts a 2-year timetable to full Brexit, is just three weeks away. This week’s annual budget delivered two days ago was austere.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.