Little Change in the Dollar as Oil Stays Low

June 22, 2017

The U.S. dollar has lost 0.4% against the kiwi, 0.2% versus the peso and loonie and 0.1% relative to the yen but risen 0.2% against the Australian dollar and 0.1% vis-a-vis the euro, Swiss franc and yuan.

Although 0.6% higher overnight, WTI crude oil remains very depressed at $42.79 per barrel, 21.4% lower than its February 23rd closing level. Gold firmed 0.4% to $1,250.40 per ounce overnight.

Equities have weakened in Europe, with losses thus far today of 0.6% in Italy and Spain, 0.4% in the U.K., and 0.3% in Switzerland, Greece and France. The German Dax is unchanged. A two-day European Union summit begins today in Brussels. Brexit tops the agenda.

Stocks in the Pacific Rim fell 0.3% in China and 0.1% in Japan and Hong Kong but climbed 0.7% in Australia, 0.5% in New Zealand, South Korea an Taiwan and 0.4% in Singapore.

The ten-year British gilt yield slipped two basis points, while its German and Japanese counterparts are steady.

Four central bank meetings of note are taking place today.

  • New Zealand’s Official Cash rate was left unchanged for a fourth straight policy meeting at 1.75%. Previous 25-basis point reductions were implemented in June, July, September and December of 2015 as well as March, August and November of 2016. An accommodative stance will likely be maintained “for a considerable period.”
  • The Filipino reverse repo rate was maintained at 3.0%. All other rates and policy settings were also left as is by officials at Bangko Sentral ng Pilipinas.
  • Norway’s 0.5% policy interest rate level since a 25-basis point cut in March 2016 was also not changed, nor is such perceived by officials as likely to change until a gradual uptrend emerges in 2019.
  • But the Bank of Mexico’s decision, which will be announced later today, is likely to entail yet another interest rate hike to counter inflation caused when the peso depreciated sharply last year.
  • A number of Fed officials scheduled to speak publicly today will also draw considerable market attention.

Britain’s CBI industrial trends survey in June produced an unexpected 7-point upward spike in the orders index to a reading of +16, best since September 1988.

Japan’s monthly economic assessment issued by the government revealed an upgraded view for the first time since December as a qualifying clause to the overall outlook of moderate recovery that “delayed improvement in part can be seen” was deleted for the first time this year. Views on personal consumption and business investment were upgraded, but inflation is still flat.

Japanese stock and bond transactions generated a net 2.39 trillion yen outflow last week, some three times greater than the prior week’s net outflow.

The Swiss trade surplus widened 73% on month to CHF 3.4 billion in May as a prior month’s drop in exports got reversed.

Irish producer price inflation decelerated from 1.8% in April to a 12-month 1.1% rise in May.

Consumer confidence in June rose in Denmark but fell in Turkey.

According to the government statistical agency, INSEE, French business sentiment climbed a point to a six-year high in June. Retail experienced to largest improvement, and manufacturing and construction also rose.

Scheduled U.S. economic data arriving today include the index of leading economic indicators, the K.C. Fed manufacturing index, the FHFA house price index, and weekly jobless insurance claims. Euroland reports consumer confidence.

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

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