Dollar Strengthens

September 26, 2017

The dollar rose overnight by 0.8% against the kiwi, 0.6% versus the Aussie dollar, 0.5% vis-a-vis the Swiss franc, 0.4% relative to the euro and 0.3% versus the yen, loonie and sterling.

Stocks in the Pacific Rim dropped 0.8% in Taiwan, 0.5% in Indonesia, 0.3% in Japan and South Korea, and 0.2% in Australia but edged up 0.1% in China and 0.2% in Hong Kong.

Stocks in Europe have slipped 0.3% in Spain and 0.1% in France and Switzerland. The British and German markets have moved less than 0.1%.

At $52.18 per barrel, oil is hovering near its firmest levels since early spring. Gold dropped 0.4% to $1,306.20 per ounce.

No significant movements to report in key 10-year sovereign debt yields overnight.

Minutes from the Bank of Japan’s Board meeting of July 19-20, contain some misgivings that inflation will rise to the 2% objective. The likely time for reaching that objective was again pushed back, this time to late fiscal 2019. But most officials agreed to retain the ultra-ease monetary policy without modification.

U.S. Fed officials are giving mixed signals. Minneapolis Fed President Kashkari and Chicago Fed President Evans made dovish remarks, but N.Y. Fed President Dudley accentuated developments that would support another increase this year. Chair Yellen speaks today.

ECB President Draghi in testimony said a domestic demand-led recovery is building momentum in the euro area, making officials more confident that inflation is on the way to returning to the central bank’s preferred range.

Tensions remain high between officials of the United States and North Korea.

German import prices were unchanged in August, but the 12-month increase accelerated to a 2-month high of 2.1%. Energy posted a 1.7% monthly jump, while all other import prices were 0.2% lower collectively than in July. Export price inflation of 1.5% matched July’s 7-month low.

Japanese corporate service prices slid 0.2% on month in August but recorded a 0.8% on-year increase, most since May.

Swedish PPI inflation slowed sharply to 3.8% in August, thanks to a 0.8% monthly drop.

In France, overall business sentiment stayed level in September according to the national statistical agency. Confidence in manufacturing slipped to 110 from a 111 reading the month before, which was the best since December 2007. But confidence improved in services and retail and were steady in construction.

South Korean consumer confidence continued to ebb given North Korea’s military menace. The index printed at 107.7 in September, down from 109.9 in August and 111.2 in July.

The British Bankers Association estimates that mortgage approvals rose to a 6-month high in August of 41,807.

Hong Kong’s trade deficit widened 20% to HKD 35.5 billion in August.

New Zealand registered a NZD 1.24 billion trade deficit in August. The cumulative deficit over the past year has been NZD 3.2 billion. Business sentiment in New Zealand dropped all the way to zero this month from 18.3 in August and 19.4 in July.

Aside from Yellen’s speech, investors await the release today of U.S. new home sales, consumer confidence, the Richmond Fed manufacturing index and the Case Shiller house price index.

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


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