Dollar Higher on News of Industrial Production Rebound and Amid Powell Testimony

July 17, 2018

The dollar is trading above Monday closing levels by 1.0% against the Swiss franc, 0.6% versus the yen and sterling, 0.4% vis-a-vis the Australian dollar and 0.2% relative to the euro, loonie, yuan and peso.

U.S. industrial  production rebounded 0.6% in June from a 0.5% decline in May. Factory output advanced 0.8%, and overall capacity use went up to 78.0% from 77.7% in May and 76.5% in June of 2017.

U.S. share prices are little changed. European stocks are up slightly. In the Pacific Rim, equities dropped 1.4% in Hong Kong, 0.7% in Indonesia and 0.6% in Australia and China but climbed 0.9% in Japan which had been closed Monday for holiday.

The 10-year Treasury yield is a basis point firmer, whereas its British and German counterparts have dipped 2 and 1 basis points.

Today’s most notable market move is a 1.1% further decline of West Texas Intermediate crude oil after Monday’s big rout. WTI is now quoted at $67.29 versus $74.08 a barrel a week ago.

Comex gold is 0.7% softer at $1231.6 an ounce.

Fed Chairman Powell is delivering his semi-annual testimony to the Senate Banking Committee, making the case for continuing interest rate normalization.

Minutes from this month’s Reserve Bank of Australia review of monetary policy observe a risk from the possibility of a global trade war, indicate that the likeliest direction of the next interest rate change is up, but show no urgency to do that soon.

Chinese house price inflation accelerated 0.3 percentage points to a 4-month high of 5.0% in June.

In Britain, new jobless insurance claims rose 7.8K last month. The ILO-basis jobless rate held steady at a 42-year low in March-May of 4.2%, but average wage earnings in March-May of only 2.5% (including bonus pay) constituted a six-month low.

Consumer price inflation in New Zealand of 1.5% on year last quarter was up from 1.1% in the first quarter of 2018 but still below the pace in all four quarters of 2017.

Canadian manufacturing sales rebounded 1.4% in May from a 1.1% decline in May. Factory orders and inventories respectively increased 3.5% and 0.4%, and the inventories to sales ratio dipped 0.01 to 1.43.

Italian industrial orders posted monthly and on-year increases in May of 3.6% and 4.9%. Italian consumer price inflation accelerated from 1.0% in May to 1.3% in June, highest since May 2017.

Singapore’s trade surplus of SGD 5.349 billion in June was the smallest since January.

Indonesia’s $1.7 billion trade surplus in June was the first surplus since March.

Turkish industrial production fell 1.6% in May but was 6.4% greater than a year earlier.

Former CIA Director John Brennan called President Trumps comments at a joint press conference with Russian President Putin “treasonous.” Trump still perceives more upside than downside in partnering with this former foe, and neither other branches of the U.S. government nor world financial markets are standing in the way of this realignment.

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

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