Market Moved By ECB Minutes
August 17, 2017
The “Account” of the ECB Governing Council Meeting on July 19-20 expresses concern about the euro, which has been rising in response to fundamental improvement in the economy, possibly strengthening too much, which could dull the recovery and delay a return to the inflation target. Although the risk of deflation has receded, inflation remains below target. Other data released today showed consumer price inflation remaining at 1.3% in July and being associated with core inflation of 1.2%. At July’s meeting, there was a discussion about tweaking language related to policy forward guidance.
The euro fell 0.6% against the dollar and also lost ground against the yen, sterling, Swiss franc, and several other currencies.
The dollar has risen 0.2% against sterling, the yuan, peso and Swiss franc and has edged up 0.1% relative to the loonie and kiwi. The dollar dipped 0.1% against the yen and is flat versus the Aussie dollar.
Stocks in the Pacific Rim climbed 0.8% in Taiwan, 0.7% in China, 0.6% in South Korea but just 0.1% in India and New Zealand. Japan’s Nikkei dipped 0.1%, and Indonesian markets were closed for Independence Day.
Stocks are lower in Europe, with losses thus far of 0.7% in Switzerland, 0.6% in Spain, 0.4% in the U.K. and Greece, 0.2% in Italy and France and 0.1% in Germany.
The ten-year Treasury yield in futures trading recovered a further two basis points, while the German bund and Japanese JGB stayed steady and low at 0.44% and 0.2%, respectively. The 10-year gilt firmed a basis point to 1.12%.
Comex gold climbed 0.7% and is again above $1,290 per ounce. WTI oil softened 0.2% to $46.68 per barrel.
On-year growth in the volume of total British retail sales dropped sharply to 1.3% in July from 2.8% in June, and the 1.8% average advance in May-July was the smallest increase since November 2013. Consumer sentiment has been hit by above-target inflation and Brexit-related uncertainty.
Japan’s customs clearance trade surplus grew to JPY 337 billion in July on a seasonally adjusted basis from just 87 billion yen in June. On an unadjusted basis, the surplus of JPY 419 billion last month was smaller than JPY 505 billion a year earlier. Export volume rose 2.6%, but import volume was 3.2% greater than a year earlier.
Australia released another strong labor market report. The jobless rate fell to 5.6% in July from 5.7% in June. Employment grew 27.9K, and the participation rate edged up 0.1 percentage point to 65.1%.
Producer output prices in New Zealand climbed 5.2% in the year through 2Q17, while producer input prices were 4.7% higher than a year earlier. Both increases showed further acceleration compared to first-quarter results After dropping 1.9% in July, New Zealand consumer confidence recovered 0.6% in August.
Euroland’s seasonally adjusted trade surplus of EUR 22.3 billion in June was the largest since December, but both exports and imports were below May levels. The unadjusted EUR 107.7 billion surplus in the first half of 2017 was down from EUR 129.3 billion in the first half of 2016.
French unemployment last quarter of 9.5% was the lowest since the final quarter of 2011 when the rate had been at 9.3%. The Dutch jobless rate of 4.8% in July was down from 6.0% a year earlier.
Filipino GDP advanced 6.5% between 2Q16 and 2Q17.
U.S. jobless insurance claims fell 12K last week to 232K and posted a 4-week average of 240.5K, down from 243.75K in the previous 4-week period. The Philadelphia Fed manufacturing index dropped another 0.6 points to a 9-month low of 18.9 in August. New presidential approval polls put Trump’s voter support at a new low for the move. He’s also losing the confidence of top business executives, but the meaningful question is whether Republicans in congress will continue to stand by their man.
Canada’s monthly survey of manufacturers showed declines in June from May of 3.0% in orders and 1.8% in sales along with a 0.02 rise in the ratio of inventories to sales, which stood at 1.36 in June.
Chile’s central bank is holding a policy review today.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.