Dollar Buoyancy Especially Against the Kiwi

September 25, 2014

The New Zealand dollar (a.k.a. the kiwi) plunged 1.6% overnight to a one-year low of $0.7944 against the U.S. currency, as RBNZ Governor Wheeler elaborated upon his recent claim that the current kiwi level is “unjustified and unsustainable.”  The Australian dollar lost as much as 1.0% to USD 0.8791, a 7-month low, as a top RBA official, John Edwards, said the Aussie currency’s downward trend likely will continue.  EUR/USD dipped just below $1.27 to $1.2697, a loss of as much as 0.6%, depressed by a published interview of ECB President Draghi that more unconventional monetary policy tools will be employed if needed to counter an  prolonged period of excessively low inflation.  Chinese officials fixed the yuan at 6.1497, its lowest since September 9.  The greenback is currently up by 0.5% against the loonie and euro, 0.4% relative to the Swiss franc, and 0.2% vis-a-vis the yen and sterling.

Chinese officials have discovered around $10 billion of trade reporting fraud.

Share prices in the Pacific Rim dropped 1.0% in Taiwan and India, 0.6% in Hong Kong, 0.2% in China and 0.1% in Singapore and South Korea but rose by 1.3% in Japan, 0.4% in New Zealand, 0.5% in Indonesia and 0.1% in Australia.  In Europe, stocks have risen 0.6% so far in Italy and Spain, 0.4% in Switzerland, 0.3% in Germany and 0.2% in France but are 0.2% lower in Britain.

A wide range of metal prices are lower, including a 0.7% drop to an 8-month low in gold, which is now quoted at $1,210.80 per ounce.  Oil eased just 0.1% to $92.70 per barrel despite the bombing of Syrian oil refineries.

Ten-year sovereign debt yields are up a basis point in Germany, down a basis point in Britain and unchanged in Japan.

August money and credit statistics in the euro area showed marginal acceleration but still way too slow on-year change.  M3 was 2.0% greater than a year before in August and posted a 1.8% advance in June-August.  Private-sector loans posted a 1.5% on-year drop instead of July’s 1.6% 12-month rate of decline.  Mortgage lending was unchanged on year, and loans to non-financial firms fell by 2.2%.

The Confederation of British Industries reported a six-point drop in the distributive trades index to 31 in September following readings of 4 in June, 21 in July and 37 in August.  The index had a score of 34 at end-2013.

Italian retail sales fell 1.5% on year in August, and wages were 1.0% higher than a year before.

In released price data, Spanish producer prices fell 0.6% on year in August, whereas Swedish ad South African producer prices over the same twelve months went up by 2.7% and 7.2%.  Icelandic consumer prices dipped 0.1% on month and decelerated 0.4 percentage points to 1.8% in the on-year comparison.  Japanese corporate service prices edged 0.2% lower in August after a 0.1% uptick in June and no change in July.  The 12-month rise, which embodies April’s consumption tax hike, was 3.5%, same as in the second quarter.

The Greek trade deficit narrowed 17.8% to EUR 1.34 billion in July.  Hong Kong’s trade deficit of HKD 31.53 billion in August was some 25% smaller than expectations and July’s result.  The Filipino trade balance swung from a $731 million surplus in June to a $33 million deficit in July.  Austrian industrial output fell 1.0% on month and 1.2% on year in July.

Turkey’s central bank held all of its interest rates steady for the first time since its meeting in April.  An interest rate decision from the Czech National Bank is due shortly.

Speculation continues that a Federal Reserve rate hike will happen closer to next March than next June.  Chicago Fed President Charles Evans, who sides usually with the dovish wing of the FOMC, indicated comfort with the market view that tightening would begin sooner rather than later.

U.S. data to be released today include durable goods orders, the K.C. Fed manufacturing index, Markit Economics’ service-sector PMI, and weekly jobless insurance claims.

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

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