Firmer Dollar and Stocks

October 16, 2015

The dollar rose overnight by 0.9% against the kiwi, 0.7% versus the Australian dollar, 0.4% relative to the loonie and sterling, 0.3% relative to the euro, 0.2% vis-a-vis the Swiss franc and 0.1% against the yen and yuan.

Share prices climbed 1.6% in China, 0.8% in India, 0.7% in Japan and Australia, 0.9% in New Zealand, and 0.6% in Hong Kong.  Gains thus far this Friday in Europe amount to 1.2% in Spain, 0.8% in Italy, 0.7% in France and Germany, 0.6% in Switzerland, but just 0.3% in Britain.

WTI oil rose 1.1% to $46.90 per barrel.  Comex gold at $1,177.35 per ounce is 0.5% lower than Thursday’s close.

The 10-year British gilt yield rose two basis points, the German bund is unchanged, and the Japanese JGB slipped a basis point.

Scheduled U.S. data releases today feature industrial production and also include the preliminary October U. Michigan consumer sentiment index, Treasury-compiled capital flows and the Labor Department JOLTS index.

The U.S. federal budget deficit in FY2015 of $439 billion was the smallest gap since 2008 and equal to just 2.5% of GDP.

Chile’s key central bank interest rate was lifted by 25 basis points to 3.25%, breaking a streak of nine consecutive 25-bp cuts from January 2012 through October 2014.  Last month’s statement from monetary officials had forewarned that an increase was likely soon.  Today’s statement implies that more restraint could become necessary to enable inflation to converge on 3%.

Peru’s key central bank interest rate, which had been hiked by 25 basis points at the prior policy meeting in September, was kept at 3.50% even though inflation edged a bit higher last month to 4.04%.

The National Bank of Serbia on Wednesday reduced its policy interest rate by another 50 basis points to 4.5%.  There have been seven such reductions in 2015.

Final September eurozone consumer price data confirmed that the harmonized CPI increased 0.2% last month and was 0.1% below its year-earlier level.  Core inflation stayed at 0.6%.  Energy fell 8.9% on year, while all other consumer prices collectively rose 1.0%.

Euroland’s trade surplus contracted to a five-month seasonally adjusted low of EUR 19.8 billion in August from 22.4 billion euros in July.  Exports fell 1.3% on month on top of a 0.8% decline in July and marking the third decrease in four months.  The year-to-date unadjusted trade surplus of EUR 156.9 billion was 50% greater than that in January-August of 2014.

Czech producer prices fell 4.2% on year in September after drops of 3.7% in August and 3.6% in 3Q as a whole.

Austrian consumer prices rose 0.7% on year in September.  EU-25 new car registrations were 9.8% greater than a year earlier in September.

Italy’s trade surplus narrowed 11.7% on month to EUR 3.26 billion in August.

New Zealand consumer prices climbed 0.3% on quarter in 3Q15 and just 0.4% on year, marking the fourth straight quarter with an on-year increase of less than 1.0%.

Japanese stock and bond transactions generated a JPY 366 billion net capital inflow last week versus an inflow of JPY 496 billion in the prior week.

Remarks overnight by BOJ Governor Kuroda did not suggest a readiness to ease policy when the Bank of Japan’s growth and inflation report is released at the end of this month.

Aside from the aforementioned U.S. scheduled data reports today, Canada will be release its monthly survey of manufacturing shipments and orders.

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

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