Dollar Mostly Higher but Only Slightly So

March 7, 2017

The dollar shows overnight gains of 0.3% against the Swiss franc and sterling, 0.2% relative to the kiwi, and 0.1% vis-a-vis the yen, loonie and euro. The dollar fell 0.5% against the peso and 0.2% versus the Australian currency. The yuan is steady after unexpected news that Chinese international reserves, which in January dipped under $3.0 trillion for the first time since early 2011, rose $7 billion back to $3.005 trillion.

There’s been a big data surprise. German industrial orders sank 7.4% in January, three times faster than forecast thanks to a 16.8% plunge in domestic demand for capital goods. Despite a strong increase in December, January’s level of orders was 5.4% lower than the 4Q average and 0.8% weaker than a year earlier.

The Reserve Bank of Australia kept its official cash rate unchanged at a record low of 1.5% as was expected. There were two 25-basis point reduction in 2016 implemented in May and August.

Republican congressional lawmakers in the U.S. finally rolled out a proposed repeal and replace plan for the Affordable Care Act.

Stocks in the Pacific Rim dipped 0.2% in Japan and India but rose 0.6% in Hong Kong, Taiwan and South Korea as well as 0.3% in Australia, China, and Singapore. European equity markets are also narrowly mixed.

West Texas Intermediate crude oil rose 0.4% to $53.39 per barrel, but Comex gold slipped 0.2% to $1,223.30 per ounce. Copper dropped over 1.0%.

Ten-year German bunds and British gilt yields slid two and one basis points, while the 10-year Japanese JGB is unchanged with a yield of 0.07%.

Australia’s Performance of Construction index rose 5.4 points to an 8-month high of 53.1 in February.

Japanese international reserves increased $767 million to $1.232 billion in February. That was the second straight advance after very big declines in the last quarter of 2016.

The Halifax index of British house prices ticked up 0.1% on month in February, depressing the 12-month rate of increase to 5.1% from 5.7% in January, 6.5% in December and 9.2% last May. Same-store sales compiled by the British Retail Consortium were 0.4% lower than a year earlier in February, fooling analysts who’d predicted a tiny increase.

Euroland revised GDP data for last quarter confirmed the preliminary indications. Real GDP rose 0.4% on quarter and 1.7% on year. The quarter-on-quarter comparison got positive contributions of 0.2 percentage points (ppts) from household consumption and 0.1 ppt each from business investment, inventories, and government spending and a negative 0.1 ppt contribution from net foreign demand. On-year growth got positive contributions of 1.0 ppt from consumption, 0.3 ppts from government spending and business investment and 0.2 ppts from net exports but a 0.1 ppt drag from inventories.

Brazil’s economy contracted more sharply than assumed in the final quarter of 2016, falling 0.9% from the 3Q level and by 2.5% compared to a year earlier. Brazil’s PPI advanced by a lesser 1.4% in the year to January.

On-year South African GDP growth held steady at 0.7% last quarter. GDP recorded a marginal quarter-on-quarter slide.

The U.S. goods and services trade deficit of $48.5 billion in January was $4.2 billion wider than in December. Given President Trump’s strong feelings about trade hurting the U.S. economy, these data will acquire greater market scrutiny and significance than has been the case previously.

Canada’s trade surplus nearly doubled in January to 810 million Canadian dollars.

In the year to January, industrial production rose 5.4% in Denmark, 1.6% in Hungary, and 1.3% in Norway. Each of those 12-month advances was smaller than had been recorded in December.

Italian producer price inflation tripled to 2.5% in January. Filipino CPI inflation rose 0.6 percentage points to 3.3% last month, and PPI inflation climbed 2.7 percentage points to 2.0% in January. CPI inflation in Cyprus doubled to 1.4% in February.

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


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