Dollar Bounces Higher

January 26, 2017

The dollar recovered 0.8% overnight against the yen and and is up 0.4% relative to the Canadian, Australian and New Zealand dollars. The greenback rose 0.2% versus the euro but slipped 0.2% against the Swissie. The yuan is unchanged, and the Mexican peso rebounded 0.3% as President Nieto said his country will not pay for the wall and he may cancel the planned meeting with Trump on the 31st.

Japan’s Nikkei leaped 345 points or 1.8%. Other share price rises in the Pacific Rim amounted to 1.4% in Hong Kong, 0.4% in New Zealand and Singapore, and 0.5% in Indonesia. Equities in Europe are up by 0.7% in Switzerland, 0.5% in Germany, 0.4% in Italy and 0.2% in Britain.

There are holidays today in Australia (Australia Day) and India (India Republic Day).

British Prime Minister May visits Trump in Washington tomorrow. A bilateral trade deal between the two countries will be high on her agenda.

Gold retreated another 0.7% to $1,189 per ounce. West Texas Intermediate crude oil firmed 0.3% to $52.91 per barrel.

Trump continues to sign executive orders fulfilling pledges he made in the U.S. presidential campaign, but there is considerable confusion over the timetable for impact on health care insurance, building the Mexican border wall, deporting illegal immigrants, resuming oil pipeline construction, and enforcement of environmental protection.

Japanese corporate service price data for December show that upward price pressure on goods from higher commodity prices and a weaker yen are filtering into services only very slowly. Corporate service prices rose just 0.1% on month in December, same as in November, and the 12-month 0.4% increase was the same as the October-November average and not very different from 0.3% in the final quarter of 2015.

The preliminary British GDP data for last quarter show a slightly stronger 0.6% advance from 3Q that had been forecast. Such matches quarterly U.K. growth in both the second and third quarters of last year, and maintained on-year growth at 2.2%. Average growth in 2016 was 2.0%, the slowest calendar year pace since 2013 and down from 3.1% in 2014 and 2.2% real GDP expansion in 2015. Growth last quarter stemmed virtually entirely from a 0.8% advance in services (+3.0% on year).

The CBI U.K. distributive trades survey recorded a totally unexpected 43-point adverse swing to a score of negative 8 in January after readings of 21 in October, 26 in November and 35 in December.

Bank of England Governor Carney warned of systemic banking risks from technological innovations in the financial sector industry.

The British Bankers Association estimates that there were 43,228 mortgage approvals in December, a 9-month high, and consumer credit was also more robust that assumed.

German consumer confidence improved 0.3 points to a reading of 10.2 in February, best since September.

Sweden’s trade balance swung to a deficit of SEK 6.8 billion last year from a surplus of SEK 13.8 billion in 2015.

New Zealand on-year CPI inflation accelerated threefold to 1.3% last quarter from 0.4% in the previous three quarters. Higher energy costs were the main factor, and the result was only marginally above expectations. 1.3% is the highest pace since the second quarter of 2014 and the first reading of at least 1.0% since 3Q14.

South African producer prices climbed 0.5% on month in December and were 7.1% above the end-2015 level.

Unemployment rates were reported by Norway (4.5% in the fourth quarter), Spain (18.6% in 4Q), Sweden (6.9% last month) and Singapore (2.2% in 4Q).

Italian retail sales fell 0.7% in November but were 0.8% higher than a year earlier.

Corporate profits in China posted only a 2.3% rise in December compared to a year earlier.

Many U.S. economic indicators will be released today: the Chicago Fed national activity index, new home sales, the FHFA house price index, the K.C. Fed manufacturing index, the index of leading economic indicators and weekly jobless insurance claims.

The National Bank of Ukraine maintained its key interest rate at 14% to counter inflation risks that could prevent hitting the 2017-18 target.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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