Dollar Falling on First Business Day of 2018

January 2, 2018

The start of a new calendar year finds the dollar picking up where 2017 ended with a slip-sliding trend. Overnight losses amount to 0.5% against the euro, 0.6% relative to the Mexican peso, 0.4% versus the yen, kiwi, and sterling, 0.3% vis-a-vis the Swiss franc and Aussie dollar, 0.2% against the yuan and 0.1% relative to the loonie.

Asian stocks experience gains of 2.7% in Hong Kong, 1.2% in China, 0.8% in Singapore, and 0.6% in Taiwan, but European equities faltered and currently show losses of 0.8% in Germany, 0.5% in the U.K and Italy, 0.6% in France and 0.3% in Switzerland.

Among 10-year sovereign debt yields, the U.S. Treasury futures has risen 3 basis points. The British gilt yield leaped 8 basis points, and the German bund is 3 bps higher.

Gold remains in strong demand with a further 0.4% advance, and oil has maintained its beachhead above $60 by edging up another 0.1%.

Markets remained closed for the extended New Year holiday in Japan, New Zealand and Switzerland.

Manufacturing purchasing manager surveys covering December were reported for a slew of Asian and European economies.

Euroland’s PMI of 60.6 matched the flash estimate and represents a record high for this data series that began in mid-1997. Production and new orders showed the fastest growth since April 2000.

Record PMI readings among euro area members also happened in Austria of 64.3, Germany of 63.3, Ireland of 59.1, while the French and Spanish manufacturing PMI scores of 58.8 and 53.1 were the best in 207 months and 114 months, respectively. The Dutch PMI settled back 0.2 points below November’s high of 62.4. Although a 3- and 2-month lows of 57.4 and 55.8, the Italian and Spanish readings reflect robust factory activity.

Britain’s manufacturing PMI fell back 1.9 points to a 3-month low of 56.3, but its fourth-quarter average score of 57.0 was the best since the second quarter of 2014.

In Eastern Europe, Russia’s manufacturing PMI rose 0.5 points to a 5-month high of 52.0. The Czech PMI reading of 59.8 was the best since February 2011, and Poland’s 55.0 reading was a 34-month high. Hungary’s 60.0 reading was the best since June.

Norway’s PMI reading of 57.8, 1.4 points better than in November, constitutes a 122-month high, and Sweden’s 60.4 score remained quite elevated but not as much as in the month before.

The Caixin-compiled Chinese manufacturing purchasing managers index climbed 0.7 points to a 4-month high of 51.5.

But elsewhere in Asia, Indonesia’s PMI of 49.3 dippedĀ  below the 50 line for the first time since last July. Readings of “50” separate contraction from expansion. Malaysia’s 49.9 was below 50 for the third time in 4 months. South Korea also posted a 49.9 PMI reading, marking a 4-month low.

On a better note, the Filipino PMI was at 54.2 although 0.6 points lower than in November, and Taiwan’s reading of 56.6 was the highest in 80 months. The Vietnamese PMI rose 0.9 points to a 3-month high of 52.5.

India’s manufacturing PMI advanced 2.1 points to a five-year peak of 54.7.

The Australian Performance of Manufacturing index slipped 1.1 points to a 2-month low of 56.2. Turkey’s PMI jumped 2.0 points to a 4-month high of 54.7.

Brazil posted a 2-month low in its manufacturing PMI of 52.4.

On-year growth of real GDP in Singapore decelerated to 3.1% in the final quarter of 2017 from 5.4% in 3Q.

Total and core Indonesian CPI inflation ended 2017 at 3.61% and 2.95%.

South Korea’s trade surplus in December was $5.8 billion, down a billion dollars from December of 2016, but the full-2017 surplus of $95.8 billion surpassed the 2016 total by 7.4%.

The U.S. manufacturing PMI survey is due later this morning.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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