Divergent Monetary Policies Lend Dollar Support
March 30, 2017
The dollar is up 0.3% against the kiwi, 0.2% relative to the euro and 0.1% vis-a-vis the yen and loonie ahead of U.S. GDP data.
Federal Reserve District Presidents Williams and Rosengren, who both represent blue state areas, favor as many as four interest rate increases this year. Chicago Fed President Evans is more inclined to three hikes but wouldn’t rule out more.
ECB Governing Council Member Liikanen defends current very loose monetary stance.
The Czech National Bank kept its ultra loose policy settings, a 2-week repo rate of 0.05% and an exchange rate commitment to preventing the koruna from strengthening beyond 27 per euro.
BOJ Board member Sato said labor market reforms are needed to lift Japanese inflation expectations.
Share prices fell 1.0% in China and 0.8% in Japan overnight. The German Dax is flat, and equities in the U.K., France, Spain and Italy are marginally lower.
Ten-year sovereign debt yields slipped three and one basis points in the U.K. and Germany.
Gold and oil have lost 0.3% and 0.2%. U.S. oil inventories reported yesterday were greater than forecast.
Economic sentiment in the euro area has plateaued. Such at 107.9 in March, a 2-month low and has ranged between 107.8 and 108.0 since December.
With the removal of upward oil price pressure, German CPI inflation slowed sharply in March, dropping about 0.6 of a percentage point to sub-2.0% territory again. Eurozone inflation runs lower than German inflation.
Spanish CPI inflation decelerated 0.7 percentage points to 2.3% in March. Portuguese retail sales and industrial production recorded smaller on-year advances in February of 1.9% and 2.1%, respectively.
Austria’s manufacturing purchasing managers index dropped 0.4 points to 56.8 in March. Although at a 3-month low, that reading signals continuing robust activity.
The KOF Swiss leading economic indicator advanced 0.7 points to 107.6 in March. That’s also up from 102.0 in January.
China’s 4Q16 current account surplus was revised sharply lower to just $11.8 billion. That compares to $69.3 billion in the third quarter and $196.4 billion in full-2016.
Japanese stock and bond transactions last week generated a 2.232 trillion yen net capital outflow, which was almost three times greater than the previous week’s net outflow.
New home sales in Australia rose just 0.2% in February after declining 2.2% in the first month of 2017.
Besides GDP, scheduled U.S. data releases today include weekly jobless insurance claims. Canadian producer prices will be reported, and a monetary policy meeting is being held in South Africa.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese current account, Ezone economic sentiment, German CPI