Weaker Dollar Especially against the Ozzie and Sterling
April 22, 2015
The Australian dollar has risen 1.2% against its U.S. counterpart, buoyed by Aussie first-quarter CPI data that showed core inflation falling no further and remaining above 2.0% target floor.
Sterling was lifted 0.7% against the dollar by Bank of England April 8-9 minutes that revealed not only a unanimous 9-0 vote for no change but also that all nine policymakers expect the 0.5% Bank Rate to be more likely to rise than fall in the policy time horizon.
The U.S. currency also fell overnight by 0.8% relative to the kiwi, 0.4% against the loonie and euro, 0.2% versus the yen and Swiss franc, and 0.1% against the yuan.
Persistent investor concern about a possible Greek financial train wreck is reflected in another 16-basis point in the Greek 10-year sovereign bond yield to 13.39%. That’s 220 basis points higher than a month ago. The 10-year German bund and Japanese JGB yields are, by comparison, unchanged on the day but low at 0.10% and 0.30% respectively. The 10-year British gilt yield increased three basis points, bolstered by Bank of England minutes.
The West Texas Intermediate oil price fell 0.7% to $56.19 per barrel. Comex gold is unchanged at $1,203.40 per troy ounce.
Japan’s Nikkei advanced 1.1%, catapulting above the 20K threshold, after stronger-than-forecast March customs trade figures showed a return to surplus for the first time in several years. The unadjusted surplus was JPY 229 billion compared to a deficit of JPY 1.45 trillion a year earlier, reflecting export growth of 8.5% but a 14.5% decline in imports. The seasonally adjusted surplus was tiny at just JPY 3 billion, but greatly improved from a revised JPY 573 billion deficit in February.
In other stock markets around the Pacific Rim, share prices climbed 2.6% in China, 0.8% in Taiwan and India, and 0.3% in Hong Kong, but such fell 0.6% in Australia and 0.4% in Indonesia, Singapore, and New Zealand. The direction is down in European trading so far, with losses of 1.0% in the German Dax, 0.9% in the Madrid Ibex, 0.6% in the British Ftse and Paris Cac, and 0.3% in Switzerland’s SMI.
Australian consumer prices rose 0.2% on quarter and decelerated to a 12-month increase of 1.3% from 1.7% in 4Q14 and 2.9% in 1Q14. Regarding core inflation, however, the trimmed mean index ticked up to 2.3% from 2.2%, and the weighted median measure of core inflation stayed at 2.4%.
The Conference Board reported indices of leading economic indicators for China and Germany.
- China’s LEI firmed 0.2% in March after gains of 0.9% in December, 0.6% in January and 1.4% in February. The index of coincident economic indicators jumped 1.7%, more than twice as fast as February’s 0.6% gain.
- Germany’s LEI increased 0.4% in February, matching January’s improvement, but was accompanied by only a 0.1% uptick in the index of coincident economic indicators.
The Westpac leading economic index for Australia fell by 0.3% in March after edging up 0.1% the month before.
Several countries reported consumer confidence. The Dutch measure declined two points to zero in April after having improved by nine points in March. Turkish consumer sentiment printed at a lower-than-forecast 65.4 in April but still 1.0 point above the six-year low in March. The Danish index dipped 0.2 to a reading of 13.7 in April. Still to come is Eurostat’s preliminary estimate of consumer confidence in the eurozone.
Italian retail sales fell 0.5% in February and were just 0.1% higher than a year before. Italian industrial orders increased by 0.8% in February and posted a 12-month increase of 2.0%.
Danish retail sales firmed 0.2% in the first quarter and rose 1.8% from the first quarter of 2014. Wage inflation in Iceland slowed to 5.6% in March from 6.4% in February.
The ZEW index of investor confidence in Switzerland improved to -23.2 in April from -37.9 in March and -73.0 in February, but the current conditions index of minus 2.4 was little changed.
South African consumer price inflation edged up to 4.0% in March from 3.9% the month before. Malaysian consumer prices increased 0.9% in March both from February and from a year earlier.
The Central Bank of the Republic of Turkey resorted to unconventional measures rather than an increase in its interest rates to stem the steep decline of the lira that threatens higher inflation. There is skepticism among investors that such an approach will prove effective.
Scheduled U.S. data to be released today included existing home sales, the FHFA index of home prices, and weekly oil inventories.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Australian CPI, Bank of England minutes, Greek debt, Japanese trade, Turkish Monetary Policy
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