Weak German and New Zealand Data and Confusion about Ukraine

August 12, 2014

The dollar advanced 0.3% against the euro and Swiss franc, buoyed by ZEW Institute data that revealed an 18.5-point plunge in investor expectations toward Germany to a reading of 8.6 in August, which is down from 61.7 last January, the lowest score since end-2012, and 18 points below the long-term average.  The German ZEW index for current conditions fell 17.5 points to 44.3.  The ZEW expectations and current conditions indices for the whole euro area respectively fell 24.4 points to 23.7 and 2.3 points to -33.8.

The dollar also rose 0.3% relative to the kiwi.  New Zealand house prices fell 0.7% on month and posted a 12-month plunge of 13.0% on year in July following a 6.1% on-year drop in June.

Information on what Russia is doing at the Ukraine border remains mixed and confusing.  Investors are more hopeful but need to stay guarded.  Sectarian strife remains high in Iraq even after Obama’s decision to provide air support.

The dollar is unchanged against the yen and sterling, up 0.1% versus the yuan and loonie, and down 0.1% vis-a-vis the Australian dollar. New data compiled by NAB showed a six-point rise in Australian business conditions to a 4-year high in July along with a 3-point rise in business confidence to a 2-1/2 year peak.  Australian house prices climbed 1.8% last quarter and by a greater-than-forecast 10.1% on year.

Share prices rose 1.4% in India, 1.3% in Australia, 0.4% in Indonesia and 0.2% in Japan.  Stocks also are up 1.0% in Spain but down 1.0% in Germany and 0.7% in France.  The British FTSE has edged 0.1% lower.

WTI oil slumped another 0.7% to $97.41 per barrel.  Comex gold is 0.4% firmer at $1316.00 per ounce.

The 10-year Japanese JGB yield remains at 0.50%, this year’s low.  The 10-year British gilt is a basis point softer, while the 10-year German bund has bumped a basis point higher.

Japanese domestic corporate goods prices rose 0.3% in July and 4.3% from a year earlier, reflecting April’s consumption tax hike. Export prices were 1.1% lower than a year before, while import prices went up 1.1%.  Japanese industrial capacity fell 0.2% in June and by 2.0% from a year earlier.  Capacity usage fell 3.3% on top of a 0.7% drop in May.  Revised industrial production was 3.4% lower in June than May; the preliminary estimate had shown a decline of 3.3%.  Output dropped 3.8% in 2Q, reversing a 2.9% rise in 1Q.

Real GDP in Singapore edged up 0.1% in 2Q and recorded only a 2.4% on-year advance, down from its increase of 4.9% between 1Q13 and 1Q14.

Industrial production in India sank 2.2% on month and rose 3.4% on year, only 5/8ths as much as assumed in June.  CPI inflation accelerated to marginally less than 8.0% in July from 7.3% in June.

British same-store sales posted a second consecutive on-year decline in July, this time of 0.3%.

France’s current account deficit leaped 124% on month to EUR 7.4 billion in June.

Swedish consumer prices slipped 0.3% in July and were unchanged compared to a year earlier.  Core inflation was 0.6% last month. In July, CPI inflation was only at 0.1% in Italy, 0.9% in Cyprus, and negative 0.9% in Portugal.

U.S. data releases today showed

  • A two-month high in small business sentiment of 95.7 in July according to the NIFB index after readings of 96.6 in May and 95.0 in June.
  • A slightly better job openings ratio of 3.3% in June according to the Labor Department JOLTS survey, which also indicated an unchanged job separations ratio of 3.3%.
  • Mixed chain store sales in the week of August 8 according to the Redbook and ICSC surveys.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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