Across-the-Board Rise in Dollar

December 2, 2014

The U.S. currency rose overnight by 1.1% against the kiwi, 0.8% versus the yen, 0.7% relative to the loonie, Aussie dollar and sterling, 0.6% against the Swiss franc and 0.5% versus the euro.  The yen touched a new low for the move of 119.30 per USD.  The 120 per dollar level, first approached at the end of 1987 has considerable historic significance as a technical support or resistance level but not in recent times.

Chinese share prices leaped 3.7%, followed by gains of 1.2% in Hong Kong, 0.5% in Singapore, and 0.4% in Japan.  Stocks lost 0.9% in Taiwan and 0.4% in India, by contrast.  In Europe, equities have advanced by 1.0% in London, 0.6% in Madrid, 0.4% in Milan and 0.3% in Paris, but such are down 0.3% in Frankfurt.

Comex gold relapsed 1.6% to $1,199.10 per ounce, while WTI oil also dropped over a percent (1.4%) to $68.01 per barrel.

The ten-year British gilt yield rebounded 7 basis points.  Treasuries have risen five basis points, and the 10-year German bund yield is two basis points higher.  But the JGB is unchanged at a mere 0.41%.

The Reserve Bank of Australia again left the Official Cash Rate at 2.5%, calling current monetary policy appropriately accommodative and warning that further Aussie dollar depreciation will be needed to achieved the more balanced growth that is sought. 

The Reserve Bank of India kept monetary policy unchanged but hinted that a cut may be made early next year if officials get assurance that a recent drop in inflation is genuine.  The overnight lending rate stays at 8%.  The overnight borrowing rate is 7%, and the reserve requirement was left at 4%.

Britain’s construction purchasing managers index fell a full point in November.  At 59.4, such connotes active growth, but there hasn’t been a slower rate of growth since October 2013.

Singapore’s manufacturing PMI edged down 0.1 to 51.8 in November, but a slightly greater decline had been predicted.

The New York regional manufacturing PMI, known as the NAPM index, rebounded sharply to 62.4 in November from 54.8 in October.

In other U.S. data, the IBD/TIPP optimism index rose 2.7% to 46.4 in November, and construction spending jumped 1.1% in October.  Weekly chain store sales figures indicated a decline last week.

In Japan, on-year growth in labor cash earnings of 0.5% was lower in October than expected and less than the 0.7% September-over-September increase.  The monetary base rose 36.8% on year in October-November, down from 39.4% in 3Q, 45.5% in 2Q and 54.1% in the first quarter of 2014.  The central bank’s balance sheet rose 3.7% during November, 10.6 trillion yen, to 297.4 trillion yen.

Australia’s current account deficit narrowed 3% to A$ 13.525 billion last quarter.  Markets didn’t react much to this news, which was dwarfed by other released data showing the largest advance in Australian building permits in slightly more than a year. 

South Korean consumer prices slid 0.2% in November.  The 12-month total and core inflation rates are 1.0% and 1.6%.

Producer prices in the euro area fell 0.4% on month in October, most in a year, as energy and other producer prices dropped 0.9% and 0.2% respectively.  The PPI was 1.3% lower than a year before.

Sweden’s current account surplus of SEK 61.7 billion last quarter was 16% greater than the 2Q surplus but 13% narrower than the surplus in 3Q13.

Fed Chair Yellen did not touch on future policy in remarks made publicly today, but the Vice Chair, Stanley Fisher, reaffirmed that such would be data driven.

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

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