Central Bank Decisions in the U.K., Ukraine and Switzerland.. Now Awaiting U.S. Data

September 15, 2016

The Bank of England left monetary policy unchanged, acknowledged better-than-expected short-term U.K. indicators since the August meeting, but left the door open to a possible further interest rate cut.

The National Bank of Ukraine reduced its policy interest rate by 50 basis points to 15.0% and indicated likely further easing if and as inflation recedes. Today’s rate reduction was smaller than those of 100 bps in July, 150 bps in June and 400 bps in May.

The Swiss National Bank left monetary policy settings unchanged and aggressively stimulative. The predicted inflation path was revised marginally lower. Officials are targeting 3-month Swiss Libor between -1.25% and -0.25% and the sight deposit rate at -0.75%. The franc is still considered overvalued. Ā Strength will be countered with FX intervention as well as the negative interest rate.

Following yesterday’s sharp plunge in oil prices, WTI crude recovered 0.3% to $43.73 per barrel. Gold is 0.1% softer at $1,324.40 per ounce.

The dollar is unchanged against the euro, Swissie, yuan, and Australian dollar. It rose overnight by 0.3% against sterling and 0.2% versus the kiwi but slipped 0.1% relative to the yen.

Japan’s Nikkei plunged 1.3%. China’s market was closed for the Autumn Harvest Festival. Stocks slipped 0.4% in Taiwan but rose 2.3% in Indonesia and 0.2% in Australian and Hong Kong. In Europe, stocks are down 0.4% in France, 0.9% in Italy, and 0.1% in Germany and Spain but up 0.2% in Britain.

The ten-year German bund and British gilt yields edged up a basis point, while the Japanese JGB eased two bps.

British retail sales volume dipped 0.2% in August, half as much as forecast, and rose 6.2% on year. Excluding fuel, such dropped 0.3% on month and climbed 5.9% on year. In June-August, retail sales were unexpectedly buoyant, with a gain of 1.6% compared to March-May.

Euroland consumer prices in August were confirmed to have posted a 0.1% month-on-month uptick and have risen 0.2% on year. Core inflation slipped from 0.9% in June and July back to May’s 0.8% pace.

The seasonally adjusted EUR 20.0 billion Ezone trade surplus in July was the smallest since February. Exports fell 1.1% on month while imports climbed 1.4%. The unadjusted January-July surplus was EUR 160.6 billion, almost EUR 20 billion greater than a year earlier.

Chinese new bank lending was twice as high in August as in July. M2 money growth accelerated to a 2-month high of 11.4% from 10.2% in July.

Australian employment settled back 3.9K in August after recording average increases of 18.4K in the three prior months. The jobless rate dipped to 5.6% from 5.7%, but the labor participation rate also declined. Aussie motor vehicle sales increased 2.9% in August.

European Union new motor vehicle sales were 10% greater in August than a year earlier.

Japanese stock and bond transactions generated a net capital inflow last week of JPY 428 billion, down from a net inflow of JPY 1.919 trillion the week before.

New Zealand real GDP advanced 0.8% on quarter and accelerated to a 3.6% year-on-year pace last quarter.

New Zealand’s manufacturing purchasing managers index slipped 0.4 points to 55.1 in August, a 2-month low.

Data to be released today in the United States include the quarterly current account and monthly retail sales, producer prices, Philly Fed manufacturing index, Empire State manufacturing index, industrial production, and existing home sales. Weekly jobless insurance claims arrive, too.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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