Dollar’s Recent Gains Trimmed

August 27, 2014

The dollar has declined overnight by 0.5% against the Canadian and New Zealand dollars, 0.4% versus the Aussie dollar, 0.2% relative to sterling and the Swiss franc and 0.1% vis-a-vis the yuan, yen and euro.

While not a big day for scheduled data reports and despite an open-ended ceasefire agreed in Gaza, minor European confidence gauges mostly softened. 

French President Holland’s cabinet reshuffle is perceived to be controversial in spite of the usual market approval of seeing governments unified and loyal to the top political leader.  At issue is the contention that supply-side reform is pointless without support for demand. 

Share prices in the Pacific Rim advanced 1.0% in Taiwan, 0.9% in New Zealand, 0.6% in Singapore, 0.4% in India and Indonesia and 0.1% in Japan.  The German Dax and Paris Cac are 0.1% softer, while Spanish and Italian equities have risen 0.3%.  The British Ftse is up 0.1%.

The ten-year U.S. Treasury yield slipped two basis points to 2.37% in futures trading ahead of today’s five-year auction.  10-year British and German sovereign debt yields dropped three and one basis points.  The 10-year Japanese JGB yield is holding at 0.49%, as signs from the Abe Government continue to suggest a fading appetite for going ahead with a further sales tax hike to 10% in October 2015.

Gold and oil have risen by 0.2% and 0.3%, respectively, to $1,287.10 per ounce and $94.09 per barrel.

Turkey’s benchmark interest rate, the one-week repo, was left at 8.25% as expected.  Such had been cut by 50 basis points on May 22, 75 bps on June 24, and 50 bps again on July 17.  Those moves partly reversed a 550-basis point tightening last January.

Italian consumer sentiment slumped 2.5 points to a reading in August of 101.9.  Analysts had predicted 104.

French manufacturing confidence dipped another point to 96 in August, and overall business confidence in the euro area’s second largest economy fell to 91 from 93.

German consumer confidence also was lower than forecast, sliding to 8.6 from 8.9 according to GFK.  German import prices posted a greater-than-expected on-year decline of 1.7% in July compared to a 12-month decrease of 1.2% in June.  Imported energy prices plunged 3.4% on month and 8.2% on year.  German export prices ticked up 0.1% on month but fell 0.1% on year in July.

Swedish consumer sentiment in August printed at 96.9, 4.2 points below the expected result.

Consumer confidence in Finland dived 7.2 points in August to a reading of 2.2, lowest since November 2012.

The Swiss UBS consumption indicator decreased to a reading of 1.66 in July from a six-year peak of 2.07 in June.

According to the Conference Board, Euroland’s index of leading economic indicators revived 0.3% in July following a 0.1% downtick in June, but the index of coincident economic indicators stagnated in the month.

Sweden’s trade surplus in July of SEK 1.9 billion was 65% smaller than the June surplus because of a 9.5% dive in exports.  The January-July surplus of SEK 24.8 billion was 31% smaller than a year earlier.

CPI inflation in Iceland slowed to 2.2% in August from 2.4% in July.

Chinese consumer sentiment dropped 1.3% in August.

Food prices in New Zealand fell by 0.7% on month and 0.1% on year in July.

Australian construction completions fell 1.2% in the second quarter, the largest decline since the first quarter of 2013.

Thursday and Friday see the release of more meaningful economic data.

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

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