Somewhat Softer Dollar
October 4, 2017
The dollar overnight lost 0.6% against the peso, 0.5% relative to the Aussie dollar and yen, 0.4% versus the the kiwi, 0.3% against the the euro and loonie and 0.2% against the Swiss franc and sterling.
President Trump, who travels to Las Vegas, is said to be closer to making a decision on his appointment for Fed Chair. Yellen gives a speech later today.
Spanish markets continue to be rattled by that country’s political crisis. The Spanish IBEX has fallen 2.6 points, and the Spanish 10-year sovereign debt yield rose another 2 basis points even as the comparable German bund yield fell four basis points, stretching the differential between them to 132 basis points.
In other stock markets, equities rose 0.8% in Hong Kong and 0.5% in India but fell 0.9% in Australia and are down 1.3% in Italy.
West Texas Intermediate crude oil fell 0.4% to $50.24 and is in danger of closing under $50 today for the first time since September 20th. Comex gold advanced $1,283.30 per ounce.
A slew of service sector purchasing manager surveys for September were reported:
- Euroland composite and services PMI indices each climbed to a 4-month high — 55.8 and 56.7, respectively. This suggests that GDP last quarter grew about 0.7%. Among individual member composite PMI scores, those of Germany and France were at 77- and 76- month highs. Spain’s reading rose 0.7 points to a 2-month high, while Ireland’s score of 57.6 slipped to a 2-month low. Italy disappointed with a 6-month low of 54.3.
- The Japanese composite PMI (51.7) and services PMI (51.0) fell to their lowest levels since October 2016. But inflation was at a 26-month high.
- The Russian composite and services PMI of 54.8 and 55.2 each conveyed the fastest activity in three months.
- South Africa’s private PMI, compiled by Standard Bank, dropped 1.3 points to a 17-month low of 48.5 and was the third sub-50 reading from the last four months.
- Singapore’s private-sector PMI improved 0.5 points to 53.7, the best score in somewhat more than three years.
- Lebanon’s private PMI sank another 0.3 points to an 11-month low of 46.0.
- Australia’s Performance of Services index dropped a full point to a 4-month low of 53.2 versus a recent high of 56.4 two months earlier. The composite PMI of Australia also declined 1.0 point, printing at 53.1.
- Sweden’s services PMI score leaped to 63.8 in September from 55.1 in August, indicating the fastest expansion in over a year.
- The British services PMI recovered 0.4 points to 53.6, a 2-month high but still well down from readings in the first half of this year. The U.K. composite PMI was also at 53.6.
Retail sales in the euro area posted a second straight month-on-month decline in August, falling 0.5% and to a 12-month increase of only 1.2%. Analysts were anticipating a monthly rise in sales. Sales contracted in both Germany and France.
Euroland’s current account surplus narrowed to EUR 71.7 billion in the second quarter, equal to 2.6% of GDP versus 3.1% of GDP in 1Q and 3.6% of GDP a year earlier. Net transfer payments increased 56% on quarter to EUR 44.9 billion.
The CBI reported a 0.1% on-year dip in British shop prices last month, a smaller decline than in any of the previous four months.
The Reserve Bank of India retained a 6.0% policy benchmark repo interest rate after the latest review of monetary policy. There was one dissenting vote favoring a 25-basis point cut. The repo rate had been cut early in August by that amount following two 25-bp reductions in 2016 and 125 basis points of easing administered in 2015. But today’s central bank statement reads somewhat hawkishly, revising projected inflation upward.
The Central Bank of Iceland surprised investors today with a 25-basis pint cut of its 7-day term deposit rate to 4.25%. Reductions of 25 bps each had been implemented also in May and June. The backdrop to today’s easing is low inflation and a steady krona.
Markets were shut today in China and South Korea.
U.S. motor vehicle sales last month were stronger than assumed.
The ADP estimate of growth in U.S. private jobs last month was 135K, down sharply from August’s result but roughly consistent with street expectations. The U.S. services purchasing managers survey will be released later today.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland retail sales and current account, Service sector PMIs