Australian and New Zealand Dollars Fall as U.S. Jobs Report is Awaited

July 2, 2015

The U.S. dollar climbed 0.9% against the kiwi, 0.6% versus the Aussie dollar, 0.2% relative to the yen, loonie and Swiss franc, and 0.1% against sterling.  The New Zealand dollar touched a 5-year low of USD 0.6670, and the Canadian dollar hit a new low for the move of C$ 1.2635.  In contrast, the euro is 0.2% higher, as polls from Greece continue to suggest people will reject leaving the monetary union.  There are to be no debt talks until the result of Sunday’s vote has been determined.  The Swedish krona fell following an unexpected further monetary easing announced by the Riksbank.

The yuan remained unchanged, but Chinese equities slumped 3.4%.

The U.S. Labor Department releases its monthly jobs report today, since markets will be closed tomorrow to observe Independence Day.  Other awaited U.S. data today are weekly jobless insurance claims, factory orders, and the NAPM New York area PMI survey.

Share prices rose 1.5% in Australia and 0.8% in New Zealand, whose central bank is thought more likely to cut interest rates further.  Stocks rose 0.8% in Indonesia, too, 1.0% in Japan and 0.5% in South Korea but fell 0.7% in Hong Kong, 0.3% in India and 0.1% in Singapore.  In Europe, share prices are up 0.8% in Switzerland but barely changed in the U.K., Germany, Spain, France or Italy.

Ten-year sovereign debt yields are higher almost everywhere around the world.  They have advanced 10 basis points in Australia, 5 bps in the U.K. and Portugal, 4 bps in Spain, Italy, and Japan, and 3 bps in The Netherlands and Germany.

Among commodity prices, Comex gold slid 0.3% to $1,163.15, while West Texas Intermediate crude oil firmed 0.2% to $57.07 per barrel.

The Swedish repo rate was sliced by a further ten basis points to -0.35%, and the planned size of quantitative easing by the Swedish Riksbank was augmented by another 45 billion kronor to reach SEK 125 – 135 billion in total.  While inflation has risen a bit, monetary officials worry that krona strength my send inflation back into negative territory.

Producer prices in the eurozone were unchanged on month in May and down 2.0% from a year earlier.  Energy fell 6.4% on year, while all other producer prices were collectively 0.3% lower.

The British construction purchasing managers index jumped 2.2 points to a 4-month high of 58.1.  But the Nationwide British house price index slipped 0.2% in June and recorded its lowest 12-month rate of rise since June 2013.  The on-year increase was 3.3%, down from 4.6% in May, 5.2% in April, 8.5% last November, and 11.0% last August.

Romanian producer prices fell 2.4% in the year to May.

Japan’s monetary base grew more slowly in June, recording on-year expansion of 34.2%, down from 35.0% in 2Q as a whole, 36.4% in 1Q, 37.3% in the final quarter of 2014, 39.4% in 3Q14, 45.5% in 2Q14, and 54.1% in 1Q14.

Stock and bond transactions last week in Japan generated a net capital outflow of JPY 1.277 trillion versus a net inflow in the prior week of JPY 396 billion.

A quarterly survey of corporate expectations of inflation over the coming 1, 3, and 5 years revealed a marginal decline in such.  For all three time frames, firms see sub-target inflation continuing.

The Australian trade deficit of A$ 2.751 billion in May was more than 20% wider than forecast and the fourteenth deficit in a row.  April’s deficit was revised up 6.4% to A$ 4.136 billion.

Home price inflation in New Zealand accelerated to 9.3% in June.

South Korea’s current account surplus widened 6.3% to $8.65 billion in May, producing a 5-month year-to-date surplus of $40.2 billion.

J.P. Morgan’s global manufacturing purchasing managers index slipped 0.3 points in June to 51.0, signifying a pretty slow rate of expansion.  Orders, production and jobs showed slower, but positive, growth.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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