Stronger Yen, Weaker Peso

April 4, 2017

The dollar slipped 0.4% against the yen but gained 0.7% relative to Mexico’s currency. The dollar is 0.5% stronger versus the Australian dollar and has edged 0.1% higher vis-a-vis the loonie and kiwi. The euro and Swissie are 0.1% higher against the U.S. currency. Market volume may have been depressed by the continuing Ching Ming Festival in China, Hong Kong and Taiwan. India’s market also is closed for Ram Navi.

Financial markets continue to second guess the wisdom of the post-U.S. rally, wondering how much of Trump’s stimulus plans might not get done. Symptomatic of diminished risk preference, gold has risen 0.4% and is near a 5-month high at $1,259.60 per ounce.

Share prices in Asia and Europe have not moved meaningfully today.

The 10-year German bund yield dropped three basis points, and its British and Japanese counterparts are a basis point softer.

West Texas Intermediate crude oil strengthened 0.6% to $50.53 per barrel.

The U.S. goods and services trade deficit to $43.6 billion in February from $48.2 billion in January and $45.6 billion in February 2016. The bilateral merchandise trade deficit with China narrowed 26.6% on month. The deficit in January-February combined was 4.9% smaller than a year earlier. Trump and Xi Jinping hold talks on Thursday-Friday that will certainly cover trade. The U.S. deficits with Germany and Japan were also smaller in February than January.

Canada reported a C$ 972 million trade deficit in February. There had been a C$ 421 billion surplus in the first month of 2017 but a C$ 2.26 billion deficit in February 2016. Exports fell 2.4% on month while imports rose 0.6%.

The Reserve Bank of Australia as expected kept its official cash rate at 1.5%, the level since 25-basis point reduction last August. RBA officials anticipate only moderate growth, noting the slow pace of wage growth and predicted that the upward path of core inflation is a to be a bit more gradual than thought previously. Note was again made that a rise of the Aussie dollar would be detrimental to the ongoing economic transition happening in Australia’s economy.

Australia’s trade surplus rebounded to A$ 3.57 billion in February from $1.50 billion in January. There was a A$ 3.70 billion surplus in December and a A$ 2.87 billion deficit in February 2016.

Retail sales volume in Euroland increased 0.7% in February, the biggest on-month rise since October, and was 1.8% greater than a year earlier. The monthly rise was led by increases of 1.8% in Germany, 1.2% in Ireland, and 0.7% in France.

Japan’s monetary base continues to show diminishing on-year growth, slowing to 20.3% in March from 21.4% in February and to 21.4% in the first quarter from 22.3% in 4Q16 and 25.0% in 2016.

Among released PMI reports today,

  • Egypt’s non-oil purchasing managers index slid from a 6-month high of 46.7 in February to a 2-month low of 45.9 in March.
  • The Saudi non-oil PMI of 56.4 last month was down from 57.0 and at a 3-month low but nevertheless indicative of continuing robust production and demand. Input price inflation rose to a 7-month high.
  • The U.A.E. non-oil PMI edged up another 0.2 points to a 19-month high of 56.2.
  • Global manufacturing PMI compiled by J.P. Morgan stayed at a 69-month peak of 53.0 in March.
  • Britain’s construction PMI dipped from 52.5 in February to 52.2 in March, matching January’s level.

Just in: U.S. factory orders increased 1.0% in February on top of a 1.5% advance in January and a rise of 1.3% in December. January-February combined orders showed an on-year climb of 4.6%. However, non-durable orders were tepid, rising just 0.2% on month.

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

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