Softer Dollar and Yen

April 20, 2017

The dollar has rebounded 0.5% against the yen but has traded down 0.5% against the Australian dollar, 0.3% relative to the euro, peso and sterling, and 0.2% vis-a-vis the Swiss franc and kiwi.

U.S. share prices opened a bit firmer. Japan’s Nikkei and the Shanghai composite index closed unchanged on Thursday. Stocks climbed 1.0% in Hong Kong, 0.5% in South Korea, 0.4% in Singapore, and 0.3% in India and Australia, however, and they show gains of 1.5% in France, 0.3% in Spain, Switzerland and Italy, and 0.2% in the U.K. and Germany.

In line with the higher risk appetite, ten-year sovereign debt yields rose by five basis points in Germany, 3 bps in the United States, 2 bps in Britain and a single basis point in Japan.

Oil has stabilized just above $50 at $50.52 per barrel of WTI. Gold slid 0.2% to $1,281.50 per ounce.

Japan recorded a JPY 615 billion customs trade surplus in March, 17.5% smaller than a year earlier. Exports and imports recorded greater-than-forecast growth from a year before. However, the seasonally adjusted trade surplus was only JPY 172 billion, down from February’s JPY 609 billion, as exports dropped 3.5% and imports grew 3.4% on month. On-year growth in exports to the United States accelerated, something the Trump administration does not wish to see.

The monthly government assessment of economic conditions in Japan included an upgrade of business confidence but left the overall view unchanged that conditions are recovering gradually but some areas of weakness can still be observed.

Japanese stock and bond transactions last month generated a net JPY 1.75 trillion capital inflow. This followed a net inflow of JPY 3.12 trillion in the first full week of fiscal 2017.

Japanese department store sales posted a smaller 0.8% on-year decline in March. Tokyo department store sales were only 0.2% less than in March 2016.

Policymakers at Bank Indonesia left its seven-day reverse repo rate unchanged at 4.75% as was expected. During 2016, the rate had been cut from 6.25%. The decision to hold policy unchanged had been expected.

Construction output in the euro area leaped 6.9% in February, led by gains of 13.6% in Germany, 8.1% in France and 18.7% in Belgium. Output surpassed February 2016’s level by 7.1%.

Consumer confidence in Euroland improved 1.4  points to a preliminary reading of -3.6 in April, best since March 2015.

German producer prices were flat on month in March and recorded the same 3.1% 12-month increase as posted in February. A monthly increase had occurred in each of the five prior months. Energy slipped 0.6% in March but posted a 4.5% on-year advance. All other producer prices collectively were 2.6% greater than a year before. The 3.1% PPI increase in the year to March mirrors a 3.1% on-year drop in the previous 12 months.

In U.S. data released this morning,

  • The Philadelphia Fed manufacturing index dropped 10.8 points to a four-month low of 22.0 in April.
  • New jobless insurance claims last week rose 10K to 244K, but the 4-week average of 243K was similar to an average of 240K in the prior four weeks through March 18.
  • The U.S. indices of leading economic indicators and coincident economic indicators went up by 0.4% and 0.2% in March. The former was smaller than gains of 0.6% in December and January and 0.5% in February.

Consumer prices in New Zealand posted a much faster 1.0% quarterly increase in the first quarter of 2017 than  in any quarter of last year, causing the four-quarter increase to accelerate to 2.2% (most since the third quarter of 2011) from 1.3% in 4Q16 and 0.4% in the first half of 2016.

National Australia Bank’s gauge of Australian business sentiment last quarter (+6) was unchanged from the reading in the last quarter of 2016.

Similar to Euroland, reported measures of consumer confidence in Denmark and Turkey that were reported today improved in April.

Dutch unemployment fell to 5.1% in March from 5.3% in February and 6.4% a year ago. Czech producer prices dipped 0.1% in March but were 3.0% higher than a year earlier.

In the year to March, Polish industrial production, retail sales and producer prices rose by 11.1%, 9.7% and 4.7%, respectively.

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


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