Several Data Releases and a Mix of Market Responses

September 8, 2015

The unofficial post-summer currency market trading season began today and finds the dollar unchanged against the euro, dow 0.8% against the Australian dollar, 0.6% relative to sterling and 0.5% versus the kiwi but up by 0.5% relative to the yen and loonie and 0.2% vis-a-vis the yuan and Swiss franc.

While the Japanese Nikkei plunged 2.4%, solid stock market gains have occurred of 3.6% in Hong Kong, 2.9% in China, 1.7% in India and Australia, 2.5% in Germany, 2.2% in Italy, 2.0% in the U.K. and 1.6% in Spain.

The ten-year British gilt yield edged a basis point higher, while its Japanese counterpart slipped two bps.  The German bund is unchanged.

West Texas Intermediate oil fell 1.0% to $45.04 per barrel, while Comex gold held steady at $1,120.67 per ounce.

Upward revisions were announced to second-quarter GDP growth in the eurozone and Japan.  But Chinese trade data revealed a steeper-than-expected on-year slump in import growth.  Japan’s economy watchers index fell below the 50 threshold for the first time since January. 

Japanese real GDP contracted 1.2% annualized between the first and second quarters, not 1.6% as reported a month ago.  Real growth over the past year was just 0.8%, down from 2.4% in the year to 2Q14.  Between the second quarters of 2014 and 2015, non-residential capital spending fell 3.3%, and private consumption edged just 0.3% higher.  Public-sector spending and exports each rose 1.5%.  Between the first and second quarters, consumption plunged 2.7%, non-residential investment contracted 3.6%, and exports slumped 16.6% at an annualized rate.  The GDP price deflator rose 1.5% in the year to 2Q15, and nominal GDP posted an advance of 2.3%.

Among other Japanese economic statistics released today,

  • A non-adjusted current account surplus of 1.809 trillion yen in July was somewhat greater than forecast, and the JPY 108 billion trade shortfall 87.5% smaller than a year earlier.  The seasonally adjusted current account surplus of JPY 1.322 trillion was similar to June’s surplus of JPY 1.300 trillion.
  • Stock and bond transactions generated a 71 billion yen net inflow in August versus a JPY 1.693 trillion outflow in July.
  • Bankruptcies posted a 13.1% on-year decline in August, the greatest shrinkage since 13.2% in May.
  • The economy watchers index fell 2.3 points to 49.3, lowest since January.  The outlook index of this gauge dropped 3.7 points to a reading of 48.2.
  • Japanese bank lending grew 2.7% on year in August, same as July’s pace and only marginally faster than 2.5% in the first half of 2015.  Excluding trusts, the increase was 2.8% in August versus 2.7% in July and 2.6% in the first half.

Manufacturing activity in New Zealand slid 0.2% last quarter after dropping 0.3% in the first quarter of 2015.

Business conditions in Australia rebounded to a reading of +11 last month after falling to +6 in July from +10 in June.  Business confidence, however, fell to +1 from +4 the month before and +8 in June.

China posted a $60.24 billion trade surplus in August, most since February and well above the June-July average surplus of $44.8 billion per month.  Imports plunged 13.8% on year, almost twice as rapidly as projected, but the 5.5% drop in exports was a bit less than assumed.

Small business sentiment in the United States rose to a 3-month high of 95.9 in August from 95.4 in July and 94.1 in June.

Revised eurozone real GDP growth last quarter got revised to an non-annualized 0.4% from 0.3% reported originally.  On-year growth of 1.5% is up from a preliminary estimate of 1.2%.  GDP also rose 1.2% in the year to 1Q.  Between 1Q and 2Q, business spending fell by 0.6%, but consumer spending rose 0.4%, government expenditures advanced 0.3%, and net exports accounted for half the rise in real GDP.  In the year through the second quarter, GDP climbed 3.1% in Spain, 2.0% in The Netherlands, 1.9% in Ireland, 1.6% in Germany, Portugal, and Greece, 1.3% in Belgium, 1.0% in France, 0.8% in Cyprus, 0.7% in Italy and Austria but not at all in Finland.

The German current account surplus of EUR 25.4 billion in July was almost spot on analyst forecasts and 13.6% wider than a year earlier.  The seasonally adjusted trade surplus amounted to EUR 22.8 billion, a bit wider than the 2Q average surplus of EUR 22.1 billion.  The average surplus was EUR 18.1 billion in 2014 and EUR 15.8 billion in 2013.  Exports rose 2.4% on month in July and 6.2% from a year earlier.  Imports climbed 2.2% on month and 6.1% on year.

The French trade deficit in July equaled EUR 3.299 billion, down from EUR 5.557 billion in July 2014 but about 20% bigger than June’s deficit.

The Bank of France’s measured business sentiment index stayed at a reading of 98 in August, same as posted the prior two months.

British same-store sales in August were 1.0% lower than a year earlier.  Analysts were looking for only a marginal dip after July’s 1.4% drop.

Swiss unemployment remained 3.3% last month.  Industrial production in the year to July rose 3.4% in Hungary but only 0.3% in Turkey.  In each case, July production was lower than June output.  Hungarian consumer prices were unchanged from a year earlier in August.  Denmark posted a DKK 6.2 billion current account surplus in July.

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

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