Dollar Calm All Things Considered

November 16, 2015

In the wake of the Jihadist attacks in Paris Friday night, the dollar has risen 0.1% against the euro, 0.3% versus the yen and Aussie dollar, and 0.2% relative to sterling.  The Swissie and yuan edged up 0.1% against the dollar.  The kiwi is 0.8% weaker.

Share prices fell 1.5% in South Korea, 1.8% in Hong Kong, 0.9% in Australia, 0.7% in Indonesia, 0.5% in New Zealand and 1.0% in Japan.  In Europe, stocks fell 0.3% in Italy, 0.2% in France and 0.1% in Spain but have risen 0.2% in the U.K. and 0.1% in Germany and Switzerland.

Ten-year sovereign debt yields slipped a basis point in the U.K. and Germany and remain below 0.30% at 0.29% in Japan.

West Texas Intermediate crude oil rose 1.3% to $41.28.  Comex gold also benefited from geopolitical tension, firming 0.8% to $1,092.49 per barrel.

Post-Paris developments:

  • The death toll has risen to 132.
  • The lead person behind the orchestrated attacks is said to be the French-raised son of Moroccan immigrants whose presently in Syria.
  • Several participants in the attacks have been identified.
  • France bombed parts of Syria.
  • The original economic objectives of the G-20 annual summit in Antalya, Turkey, were subordinated to efforts toward a coordinated response to the escalation of world terrorism.  It seems that for a while Russia and the United States have found some common ground.
  • Long term interest rates and share prices fell on flight-to-safety capital flows.  The dollar is firmer.

Japanese real GDP fell 0.8% at an annualized rate between 2Q and 3Q despite growth of 8.0% in residential construction, 2.1% in personal consumption, 10.9% in exports, and 0.7% in public expenditures.  A run-down of inventories exerted a 2.1 percentage point drag on real GDP growth last quarter.  This was the second straight GDP contraction, confirming yet another recession in the world’s third largest economy.  The GDP price deflator rose 0.2% at an annualized rate and 2.0% between 3Q14 and 3Q15.  Nominal GDP ticked up just 0.1% annualized.  In the two years between the third quarters of 2013 and 2015, real GDP slid 0.4% (-0.2% per year), and nominal GDP grew 3.7% (+1.8% per year in spite of a VAT hike).

Third-quarter Thai GDP growth, in contrast, accelerated to 1.0% last quarter.  Thai GDP was 2.9% greater than a year earlier.

Peru’s central bank late Friday announced an as-expected decision to leave the 3.5% monetary policy interest rate unchanged.  2015 has seen a 25-basis point cut in January and a 25-bp hike in September.  Follow-up increases are possible because of above-target inflation and the sol’s vulnerability to Fed tightening and weak commodity prices.

New Zealand retail sales volume went up by a faster-than-forecast 1.6% in the third quarter, lifting the on-year advance to 5.7%.

New Zealand’s performance of services index fell 2.8 points to a 10-month low of 56.2 in October.

Euroland CPI inflation accelerated to 0.1% last month, revised from zero, compared to an on-year dip of 0.1% in September.  Core inflation rise to 1.1% from 0.9% and was also higher than 0.7% in October 2014.  Following tumbles of 2.2% in August and 1.7% in July, energy prices slid just 0.5% on month.

The British Rightmove house price index dropped 1.3% in November, but its 12-month rate of increase rose 0.6 percentage points to 6.2%.

New motor vehicle sales in Australian retreated 3.6% in October after spiking 5.5% in September.  Their on-year increase was 4.2% in the latest month.

In the year to October, Indian wholesale prices fell by a smaller-than-forecast 3.8%.  Producer prices fell 4.9% in Denmark and 3.9% in the Czech Republic.  Austrian consumer price inflation remained at 0.7%.

In Norway, an energy exporter, the trade surplus of NOK 20.57 billion in October was 38.5% smaller in October than a year before.

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

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