Sterling and Price of Oil Falter
June 20, 2017
Sterling declined 0.6% following delayed Mansion house speeches by Bank of England Governor Carney and Chancellor of the Exchequer Hammond. Carney reiterated warnings that Brexit will damage the British economy, cited anaemic wage growth and slower personal consumption, and expressed opposition to hiking the central bank’s interest rate. Hammond staked out a soft position on Brexit opposite to Prime Minister May’s view.
News that Libyan oil production has climbed to a 4-year high depressed West Texas Intermediate oil by 2.2% today to $43.30 per barrel, its weakest level since mid-November.
The dollar strengthened 0.7% against the Mexican peso, moving back above MXP 18.0. The dollar is unchanged against the euro, yen and Australian dollar. It’s risen 0.2% relative to the loonie and 0.1% versus the yuan but fallen 0.2% against the Swiss franc and 0.1% vis-a-vis the kiwi.
Share price changes in the Pacific Rim were mixed overnight, with advances of 0.9% in Indonesia, 0.8% in Japan and 0.7% in Taiwan but drops of 0.3% in Hong Kong and Singapore and 0.1% in New Zealand, South Korea and China. Equities in Europe are down 0.5% in Spain, 0.2% in Greece and 0.1% in Italy but up 0.3% in Switzerland, 0.2% in France and Germany and 0.1% in the U.K..
Ten-year British gilt and German bund yields dipped 3 and 1 basis points. The Japanese 10-year JGB is steady.
The New York and Chicago Fed District presidents endorsed gradual policy normalization; other Fed officials are scheduled to speak publicly later today.
German producer price inflation slowed 0.6 percentage points in May to a 4-month low of 2.8%. The PPI dropped 0.2% on month, led by a 0.8% slide in energy.
Euroland’s seasonally adjusted current account surplus imploded 37.8% to EUR 22.2 billion in April, a 29-month low. Much of that drop involved an EUR 8.7 billion increase in the net outflow from transfer payments. Over the past dozen reported months, the current account surplus equaled 3.2% of Ezone nominal GDP.
The U.S. quarterly current account deficit will be reported later today.
Japanese department store sales were unchanged in May from their year-earlier level.
In April, Australia’s index of leading economic indicators rose 0.5%, while South Africa’s LEI fell by 0.8%. South Africa recorded a current account deficit last quarter equal to 3.2% of GDP.
The Swiss government’s statistical agency, SECO, released new macroeconomic forecasts, projecting economic growth this year of 1.4% and CPI inflation of 0.5%.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, falling price of oil, Mark Carney Mansion House speech