Dollar and Stocks Up and Commodities Down Ahead of U.S. Jobs Report

January 5, 2018

The dollar has advanced overnight by 0.5% against the yen, 0.4% vis-a-vis the peso, 0.3% versus the Aussie dollar, 0.2% relative to the euro and Swiss franc, and 0.1% against the loonie. There’s been a dip of 0.1% versus the yuan.

The Nikkei-225 in Japan recovered another 0.9%, and the South Korean Kospi is 1.3% stronger. Stocks in China and Hong Kong rose 0.7% and 0.3%. In Europe, share prices are up 1.1% in Germany, 0.7% in Italy and France, 0.5% in Spain and 0.3% in Britain.

The 10-year futures Treasury yield edged a basis point higher, but equivalent British, German and Japanese sovereign debt yields are flat.

One of the biggest moves has been a 1.0% drop in West Texas Intermediate crude oil to $61.42 per barrel, and Comex gold has softened 0.2%.

U.S. and Canadian labor market and trade figures get released shortly.

German retail sales volume catapulted 2.3% higher in November, the biggest advance so far in 2017. This produced a 4.4% on-year increase and suggests that sales volume for 2017 as a whole will have risen about 2.9% after a 2.6% gain in 2016.

The German construction purchasing managers index rose to a 4-month high of 53.7 in December, implying good dynamic expansion.

Retail activity in the euro zone improved sharply last month. The retail purchasing managers index advanced 0.6 points to a 6-month high of 53.0 in December, with the indices of Germany and France at 8- and 3-month highs but Italy’s 49.5 reading after 49.2 in November showing continuing contractions. A score of 49.9 or less means contraction.

Consumer price inflation in Euroland edged down 0.1 percentage point (ppt) according to the preliminary estimate to 1.4%, which is only 0.3 ppts above the level at end-2016. Core inflation was 0.9% for a third straight month and tied with its end-2016 level as well.

Euroland producer prices jumped 0.6% overall in November and accelerated to a 2.8% 12-month rate of increase. This was caused by a 2.3% rise in energy. Non-energy producer prices were unchanged month-on-month and posted a smaller 2.1% on-year advance.

British unit labor cost inflation slowed to 1.3% in the third quarter of 2017 from 1.7% in the prior quarter. U.K. shop prices recorded a 0.6% year-on-year drop in December, more than any other month since May.

On-year growth in Japan’s monetary base slowed to 12.9% last quarter from 15.8% in 3Q17, 17.0% in full-2017, 25.0% in 2016 and 34.0% in 2015.

Australia’s goods and services trade balance was in deficit by A$ 628 million in November, twice as much as the A$ 302 million shortfall in October. September saw a surplus of A$ 1.169 billion.

Japan’s composite PMI in December matched November’s 2-month low of 52.2. The services PMI edged down 0.1 point to a 3-month low of 51.1 — second lowest of 2017 — even though business confidence improved and output price inflation hit a 16-month high.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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