Dollar and Stocks Continue to Slide

November 15, 2017

Dollar losses overnight amounted to 0.7% against the yen, 0.5% versus the euro, 0.4% vis-a-vis the Swiss franc and kiwi, 0.3% relative to the yuan, 0.2% against the peso and 0.1% versus sterling. The yen touched a 4-week high, and the euro moved back above its January 1999 starting level.

Ten-year sovereign debt yields are down 4 basis points in the U.K. and 3 bps in the U.S. and Germany.

The Japanese Nikkei tumbled 352 points of 1.6%. Elsewhere in the Pacific Rim, stock markets dropped by 1.5% in Hong Kong, 0.9% in Singapore, 0.8% in China, 0.6% in Australia and 0.5% in Taiwan. Share prices in Europe lost another 1.1% and 1.0% so far in Italy and Germany. There’ve been looses of 0.5% in the U.K., France, Switzerland and Spain. The DOW is near 100 points lower.

West Texas Intermediate oil slipped in the wake of Wednesday’s U.S. inventory report and is down 1.1% so far today. Gold is 0.3% firmer.

Two central banks announced unchanged policy settings.

  • The Central Bank of Chile’s 2.5% benchmark interest rate since a cut in May was retained.
  • The Central Bank of Iceland’s 7-day term rate, which had been reduced three times so far this year, was this time kept at 4.25%.

U.S. retail sales rose unexpectedly in October following a 1.9% leap in September. October saw sales edged up 0.2% further to a level 4.6% above that in October 2016. For August – October, average sales were 1.6% above the May – July mean and 4.3% higher than a year earlier. Consumer demand continues to be resilient.

U.S. consumer prices rose 0.1% in October despite a 1.0% further drop in energy. On-year CPI inflation was 2.0% and also has averaged 2.0% in the last three reported months. Moreover, core CPI edged up to 1.8%, its first uptick in nine months, following 1.7% in each month of the third quarter.

After climbing to a three-year high of 30.2 in October, the Empire State Manufacturing Index settled back to a 4-month low of 19.4 in November.

Japanese real GDP grew at a 1.4% annualized rate between the second and third quarters. Consumption, residential investment, government spending, and imports all contracted in the month. Had domestic final demand been merely unchanged in the quarter, GDP would have risen 3.0% annualized, thanks to a 2 percentage point contributi0n from net foreign demand and the change in inventories. Japanese real GDP and nominal GDP last quarter were each only 1.7% greater than in the third quarter of 2016.

Japanese September industrial production was revised to show a marginally smaller monthly drop of 1.0%. Output climbed 0.4% in 3Q from 2Q, down from a second-quarter advance of 2.1%, and was 4.2% greater than in the third quarter of 2016. Capacity use slumped 1.5% in September ad dipped 0.1% in the third quarter.

The latest batch of British labor statistics is weak. Unemployment claims rose another 1.1K in October, and third-quarter wage costs were only 2.2% higher than a year earlier.

Australian labor cost inflation continued to trace a steady path last quarter, rising 0.5% from the 2Q level and 2.0% on year. After improving 3.6% in October, consumer confidence this month fell back 1.7% according to the Westpac gauge.

Euroland’s seasonally adjusted trade balance posted its biggest surplus so far this year, printing at EUR 25.0 billion in September. Exports grew 1.1% on month, while imports dropped 1.2%. The nine-month unadjusted EUR 170.4 billion surplus was EUR 24.7 billion smaller than a year earlier, however.

French CPI inflation edged 0.1 percentage point higher to 1.1% in October.

Zimbabwe president since 1967, Robert Mugabe, has been ousted by the military.

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

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