Some Good News on This September 11th

September 11, 2017

Today is the 16th anniversary of the terrorist attacks on the World Trade Center and Pentagon that killed thousands, but there has so far been no follow-up acts of violence. On the contrary, North Korea failed to test another missile over the weekend, and property damages in Florida have apparently been less than half the top end of estimates that were being mooted before its landfall.

The dollar rebounded overnight by 0.7% against gold and the yen and by 0.5% versus the Swiss franc, each of which attracted safe haven demand last week.

The dollar also rose 0.2% against the euro but is down 0.3%, 0.2% and 0.1% relative to the loonie, kiwi and sterling and unchanged vis-a-vis the Australian currency.

Benoit Coeure, an ECB Director, made dovish remarks that continuing strength in the euro would dampen the inflation outlook and warrant an accommodative stance for longer.

Ten-year British gilt and German bund yields rose by four and two basis points, whereas the 10-year Japanese JGB yield dipped a basis point to -0.01%.

West Texas Intermediate crude oil revived 0.6% to $47.77 per barrel.

Equities strengthened overnight by 1.4% in Japan, 0.9% in China, 0.7% in Australia and South Korea, and 0.6% in India. In Europe, stocks are up 1.5% in Spain, 1.1% in Germany, Italy and France, 0.7% in Switzerland, and 0.5% in the U.K. and Greece.

Chinese CPI inflation accelerated to a 7-month high of 1.8% in August on a 0.4% month-on-month rise in consumer prices. PPI inflation of 6.3% was the most elevated since 6.4% in April.

Japanese year-on-year M2 money growth of 4.0% in August matched July’s rate and exceeded 3.9% posted in the second quarter and 3.4% in 2016.

Core domestic private machinery orders in Japan leaped 8.0% on month, way more than forecast. Foreign machinery orders were 9.1% greater than in June and 30.1% above the level in July 2016.

A 36.6% increase in Japanese machine tool orders in August from a year earlier was the greatest on-year rise so far this year.

Japan’s tertiary index, a monthly gauge of service sector activity, continues to lag industrial production, edging up just 0.1% in July after a 0.2% advance in July and no change in May. The tertiary index was just 1.0% above its year-earlier level.

The Bank of France’s index of French business sentiment in manufacturing dipped a point to a 2-month low of 104 in August but was mitigated in part by somewhat improved sentiment in services and construction. Central bank officials project that third quarter GDP growth will match the 0.5% rise in 2Q.

On-year growth in Italian industrial production of 4.4% in July surpassed analyst expectations.

Consumer prices in Norway rose 1.3% in the year to August, a shade less than in July, but PPI inflation doubled to 4.0%. Danish and Czech consumer price inflation stayed level at 1.5% and 2.5%, respectively, last month.

The 6.5% on-year rise of Turkish real GDP in the second quarter beat expectations and was considerably stronger than the first quarter’s result.

Canadian housing starts data will be reported later today.

Fed Vice Chairman Stanley Fisher will be stepping down in the middle of next month, almost a year sooner than had been expected. Chair Yellen’s term ends in January. The perceived paths of Fed and ECB policy continues to be a key factor affecting the dollar.

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

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