Dollar Marking Time Ahead of Today’s FOMC Announcement

July 29, 2015

The FOMC policy statement will be released at 18:00 GMT (14:00 EDT).  There is no press conference or release of updated forecasts.  No policy change is expected, but investors are unsure if the statement will provide clarifying information regarding the likelihood of a rate hike at September’s meeting.  I look for vagueness on that regard, as officials need to be flexible.

The Central Bank of Brazil also has a policy statement planned today.

The dollar is narrowly mixed, with gains of 0.2% against the Australian dollar and 0.1% versus the yen, euro, loonie and kiwi but a loss of 0.2% relative to sterling and 0.1% vis-a-vis the Swiss franc.  The yuan remained steady  overnight.

In a speech, Reserve Bank of New Zealand Governor Wheeler implied that the central bank will cut interest rates further in part to promote further kiwi depreciation.

To support the ruble and preserve Russian reserves, the Central Bank of Russia, which has a policy meeting on Friday, has banned purchases of foreign currency.

Ten-year sovereign debt yields rose four basis points in the U.K. and a basis point each in Japan and Germany.  Futures trading points to a rise in the U.S. Treasury yield at the open.

China’s Shanghai Composite index recovered 3.4%.  Share prices also rose 0.7% in Australia, 0.6% in Hong Kong, 0.4% in India and 0.2% in Japan.  Equities are down 0.8% in Italy and 0.1% in Spain but up by 0.9% in Switzerland, 0.5% in Britain, 0.3% in France and 0.2% in Germany.

West Texas Intermediate oil fell 0.5% overnight to $47.93 per barrel.  Comex gold edged up 0.1% to $1,096.39 per ounce.

Chinese consumer confidence rose 1.9% in July to a 4-month high but was little changed form a year earlier.

Japanese retail sales fell 0.8% between May and June, reducing the 12-month rate of increase to 0.9% from 3.0% in May and 4.9% in April.  Large-store sales recorded an on-year dip (0.3%) for the first time in three months.

Small business sentiment in Japan according to the Shoko Chukin index rebounded to a 4-month high of 49.3 in July from 46.9 in June, 48.1 in May and 47.4 in April.

The 12-month drop in Singaporean producer prices of 8.1% in June was similar to drops of 8.3% in May and 7.9% in April.  The PPI fell 0.5% on month.

South African M3 money and private credit respectively grew 8.9% and 8.1% in the year to June.

German consumer confidence held steady as expected in the latest monthly report with a reading of 10.1.

The Confederation of British Industry released its July survey of distributive trade trends, showing a 3-month low of 21 in July after 29 in June and 51 in May.

British M4 money contracted 0.3% in the year to June.  Mortgage approvals increased almost 3.0% to 66.6K.

The UBS Swiss consumption indicator bounced back to 1.68 in June from readings of 1.62 in May, 1.67 in April and 1.34 in March.

French consumer confidence edged down a point to 93 after three straight monthly readings of 93.

Irish consumer sentiment dropped 3% in July to 99.7, but the three-month moving average remained on an upward course.

Danish retail sales rose 0.6% on month and 1.5% on year in June. 

Sweden’s economic tendency measure improved to 102.7 in July form 101.6 the month before, as better manufacturing confidence outweighed a slide in consumer sentiment.

Talks trying to hammer out details of Greece’s third big bailout are not going smoothly.  No surprise there.

U.S. mortgage applications rose 0.8% last week, as the 30-year fixed rate mortgage slid six basis points to 4.17% in the week.

U.S. pending home sales will be reported today.

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

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