Somewhat Softer Dollar on This First Day of Winter

December 21, 2016

The dollar has weakened 0.7% against the euro, 0.4% relative to the Swiss franc, 0.3% vis-a-vis the yen, 0.2% versus sterling, and 0.1% against the kiwi and yuan.

U.S. stocks are a tad lower. The German Dax is flat. Stocks fell in other European centers and lost 1.0% in Indonesia, 0.3% in China and Japan, and 0.2% in South Korea but rose in China, Australia and New Zealand.

Among 10-year sovereign debt yields, German bunds and British gilts dipped two basis points and the 10-year Treasury is a basis point softer as are Japanese JGBs.

West Texas Intermediate oil firmed 0.2% to $53.39 per barrel. Comex gold edged up 0.1% to $1,134.60 per ounce.

U.S. existing home sales rose 0.7% in November to their highest total since February 2007. Mortgage applications recovered 2.5% last week.

Euroland consumer sentiment increased 1.1 points to -5.1 in December, its best level of 2016. Euroland’s index of leading economic indicators rose 0.3% in November, but the index of coincident economic indicators was unchanged for a second straight time.

Japan’s all industry index firmed 0.2% in October, thanks to stronger service sector activity, but was still 0.2% lower than in October 2015. Japanese supermarket sales posted a 0.8% on-year advance in November.

Malaysian consumer price inflation accelerated 0.4 percentage points to 1.8% in November.

New Zealand’s trade deficit narrowed less than expected to NZD 705 million ┬áin November from NZD 805 million in October. There was a running NZD 3.18 billion deficit over the past year.

The Swedish Riksbank kept its negative 0.50% repo rate unchanged but extended the bond purchase program of quantitative stimulus through the first half of 2017. By mid-year, SEK 275 billion of bonds will have been bought, up from a planned total of SEK 245 billion at the end of this year. The central bank projects 1.4% inflation and 2.4% growth next year.

The Bank of Thailand retained a 1.5% key interest rate, which is the lowest since June 2010. That’s been the level since reductions of 25 basis points each in March and April of 2015. Monetary officials maintain that an accommodative stance is appropriate. Inflation is below target, and core CPI is low and stable. The economy is coping with lots of uncertainty. While positive growth is projected, downside risks have increased.

Minutes from the Reserve Bank of India’s policy meeting earlier this month were more hawkish than expected, generally dismissing the temporary drag on growth from demonetization and expressing some concern about the outlook for inflation in the wake of higher energy prices.

French producer prices were 0.2% lower in November than a year earlier.

Belgian business sentiment improved 1.6 points to a reading of minus 0.2.

Danish consumer sentiment weakened in December.

Italian hourly wage earnings edged up 0.1% in November but were a mere 0.5% higher than a year ago.

The Swiss current account surplus widened 5.4% to CHF 20.62 billion in the third quarter. Swiss M3 money expanded only 2.0% between November 2015 and last month.

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


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