Commodity-Sensitive Currencies Firmer this Monday

October 5, 2015

The U.S. dollar declined overnight by 1.0%, 0.6% and 0.5% against the New Zealand, Australian and Canadian dollars.  The dollar, in contrast firmed 0.3% against the Swiss franc, 0.2% versus the yen and 0.1% relative to the euro.  Sterling and the yuan are unchanged.

Following Friday’s very volatile post-jobs swings in U.S. equities, share prices in the Pacific Rim advanced 3.2% in Indonesia, 2.1% in Singapore, 2.0% in Australia and 1.6% in Japan.  European stocks have jumped 3.8% in Greece, 3.2% in France and Spain, 2.4% in Italy, 2.1% in Germany and Great Britain, and 2.0% in Switzerland.  China’s closed, observing its commemoration of the 1949 revolution.

The 10-year British gilt yield increased seven basis points to 1.77%, and the yield on 10-year Treasuries is back over 2.0% at 2.01% in futures trading.  The comparable German bund and Japanese JGB yields remain very low at 0.51% and 0.30%.

Comex gold settled back 0.5% to $1,133.18 per ounce, while West Texas Intermediate crude oil is 1.1% higher at $46.06 per barrel.

Many more purchasing manager surveys for September were reported.

Euroland’s services PMI was revised down to a 7-month low of 53.7 from a preliminary 54.0 estimate and 54.4 in August.  Spain’s 55.1 reading constitutes a 9-month low.  The scores in Ireland of 62.4, Italy of 53.3 and France of 51.9 are 2-month highs, whereas Germany’s 54.1 is 0.4 points below its preliminary indication and at a 2-month trough.

Euroland’s composite PMI of 53.6 is down from 54.3 in August and at a 4-month low, suggesting third-quarter GDP growth of about 0.4%.  Germany, too, seems destined for 0.4% growth in the quarter, but Italy (about 0.3%) and France (around 0.2%) appear to have experienced softer economic activity than the region as a whole.

Great Britain’s service-sector PMI fell 3.3 points to a 29-month low in September.  The third-quarter average level is at a nine-quarter low.

Australia’s services PMI fell to a 3-month low of 52.3 in September from 55.6 in August and 54.1 in July.

Japan’s services PMI was 52.9 in September, down from a 22-month high of 53.7 in August but above July’s 51.2 outcome.  That left Japan’s composite PMI at 51.2, a 5-month low.  There’s concern Japan might have experienced a second consecutive contraction of GDP last quarter.  It would be the fifth technical recession for the world’s third largest nation-state economy since the Great Recession.

South Africa’s private PMI compiled by Standard Bank fell 1.4 points to a 14-month low of 47.9.

The non-oil PMIs of Egypt, Saudi Arabia, and the United Arab Emirates fell respectively to a 2-month low of 50.2, a 3-month low of 56.5 and a 2-month low of 56.0.

On a brighter note, Sweden’s services PMI rose 4.6 points to a 6-month high in September of 57.0.

The Singaporean private PMI printed at a 7-month high of 51.4 in September.

Lebanon’s private PMI score of 48.1 remained below the 50 level that separates expanding activity from a worsening performance, yet it was above August’s 47.8 score, signifying a slower rate of deterioration.

The Russian service-sector and composite PMI readings of 51.3 and 50.9 were better than August results but lower than those from July.

Investor sentiment toward the eurozone according to the Sentix measure dropped 1.9 points to an 8-month low of 11.7 in October.  The expectations sub-index was at a nine-month low.

Retail sales in the eurozone were unchanged in August despite a 0.8% advance in food, drink and tobacco.  Analysts were anticipating a modest increase on the month.  On-year growth in sales slowed to 2.3% from 3.0% in July.  Between July and August, sales fell in Germany, Belgium, Finland and Austria but rose in France, Spain, Portugal and Ireland.

Turkish CPI inflation accelerated 0.8 percentage points to 7.95% in September.  PPI inflation rose 0.7 percentage points to 6.92%.

On-year growth in Japanese labor cash earnings slowed to 0.5% in August from 0.9% in July in yet another sign of returning deflation and recession.

Between July and August, industrial production rose 4.7% in Sweden but fell 1.0% in Ireland. 

The U.S. non-manufacturing purchasing managers index gets reported later today.  Canadian and U.S. trade data arrive Tuesday.  So do Euroland retail PMIs.

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

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