U.S. Markets Shut but Dollar Still Slides

January 15, 2018

The United States is observing the birthday of Martin Luther King, Jr. President Trump once again rejected the criticism that he’s a racist.

The Bank of Japan has held a quarterly branch managers meeting and published its regional economic report. Three of the nine regions are experiencing improved conditions. Two regions are expanding, four are expanding moderately, and the remaining three continue to recovering. In upbeat remarks, Governor Kuroda said core CPI inflation is hovering around 1%. This upgrade from “around zero percent” reinforces speculation that the Bank of Japan, like the ECB, may reduce stimulus this year. The yen rose 0.3% against the dollar and touching a 4-month high near 110.6/USD.

The dollar has also declined today by 1.2% against the Mexican peso, 0.6% versus the Swiss franc, 0.5% relative to the yuan and euro, and 0.4% vis-a-vis the Australian and New Zealand dollars, and 0.2% against the loonie.

  • Euroland’s trade surplus widened by 3.5 billion euros to a seasonally adjusted EUR 22.5 billion in November, as exports shot up 3.4%, twice as much as the monthly rise of imports. But concerns that an appreciating currency may blunt competitiveness depressed European stocks somewhat. Share prices are down 0.8% in Greece, 0.3% in Germany and 0.1% in France and the U.K. where even sterling is at a 1-1/2 year high.
  • The Bank of Canada heads a light week of central bank policy reviews. Opinion is mixed over whether the overnight money target will be hiked.
  • China’s yuan was fixed at its highest level since May 2016.

In the Pacific Rim, stocks closed mixed, with gains of 0.7% in Taiwan and India, 0.5% in Singapore, and 0.3% in Japan and South Korea but losses of 0.9% in Hong Kong, 0.5% in Shanghai and 0.3% in New Zealand.

Gold firmed 0.6% to $1,342.40 per ounce, and copper shot up almost 2%. West Texas Intermediate crude oil settled back 0.2% to $64.14 per barrel.

Ten-year British gilt and German bund yields eased 2 and 1 basis points, while their Japanese counterpart stayed level.

Despite the wider Ezone trade surplus in November, the January-November cumulative surplus of EUR 213.1 billion was EUR 24.6 billion narrower than a year earlier in non-seasonally adjusted terms.

Ireland’s construction purchasing managers index improved 1.3 points to a 6-month high of 58.0 in the final month of 2017. Ireland’s trade surplus narrowed 9.1% on month in November.

Norway’s trade surplus strengthened to a surplus of NOK 24.7 billion in December, widest in 11 months and larger than the year-earlier surplus.

Dutch retail sales were 4.5% larger in December than a year earlier.

The British Rightmove house price index rose 0.7% on month in January but only 1.1% on year. Danish PPI inflation imploded to only 0.2% in December.

Japanese M2 money growth slowed to a 12-month increase of 3.6% last month and 3.9% in the fourth quarter from 4.0% in both November, 3Q17, and full-2017.

South Korea recorded a $5.54 billion trade surplus in December, which was smaller than November’s surplus or the year-earlier surplus. Indonesia unexpectedly posted its first trade deficit in five months during December but had an $11.84 billion surplus for 2017 as a whole.

Indian wholesale price inflation slowed to 3.58% in December from 3.93% in November mainly due to lessening pressure from food. Fuel price inflation increased.

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

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