Dollar Lifts as U.S. Markets Reopen

January 16, 2018

Following the three-day U.S. holiday weekend, the dollar has recovered 0.4% against the kiwi, 0.3% versus the euro and sterling, 0.2% relative to the yen and Aussie dollar and 0.1% against the Swiss franc. The loonie and yuan are unchanged, and the peso advanced another 0.4%.

Share prices rose 1.8% in Hong Kong, 1.0% in Japan, 0.8% in China, and 0.7% in South Korea. The German Dax is 1.0% higher. Stocks have also risen 1.0% so far in Spain and 0.6% in Italy, but the British Ftse has edged 0.1% lower. U.S. futures are pointing upward.

10-year sovereign debt yields are down two basis points in Germany and a basis point in the U.K. but unchanged in Japan. In futures, the 10-year Treasury dipped two bps further overnight.

Comex gold and WTI crude oil are trading 0.3% and 0.6% lower this Tuesday.

U.S. lawmakers in Washington continue to horse trade in search of a spending deal to avert a threatened government shutdown at the end of this week.

Japan, Germany, Italy and the U.K. released price data.

  • Japan’s domestic PPI rose 2.4% in 2017 after falling 3.5% in 2016. Export prices went up 5.4% after posting a 9.3% drop in 2016, and import prices rebounded 10.9% last year from a 16.4% drop the year before. Domestic corporate goods price inflation slowed to 3.1% in December from 3.6% in November.
  • German CPI inflation was 1.8% last year on average after increases of just 0.5% in 2016, 0.3% in 2015, and 0.9% in 2014. December-over-December CPI inflation of 1.7% matched the outcome in December 2016. Over the latest 12 months, energy and food prices went up 1.3% and 2.9%, while the core rate of all other consumer prices collectively rose 1.5%.
  • German wholesale prices dropped 0.3% on month in December, their first decline since July. This trimmed the on-year WPI pace to 1.8%, a three-month low, from 3.3% and mostly reflected a marked slowdown in energy costs.
  • Italian CPI inflation in December remained flat at 0.9% (1.0% harmonized).
  • Irish CPI inflation dipped 0.1 percentage point to 0.4% but stayed at 0.5% on a harmonized basis.
  • British CPI inflation settled back to a 3-month low of 3.0% in December from 3.1% in November. Core CPI inflation dipped 0.2 percentage points to 2.5% last month after four straight readings of 2.7%. Retail price inflation accelerated to 4.1%, however.
  • British producer output price inflation rose to 3.3% in December from 3.1% in November and 2.6% in October. Core PPI-O was 2.3%. Producer input price inflation dropped back to 4.9% after spiking to 7.3% in November from 4.8% in October.
  • The British government’s house price index showed an on-year increase of 5.1% in November, which lay between October’s revised 5.4% increase and a preliminary 4.5% estimate for that month.

Portuguese and Czech producer prices increased 2.4% and 0.7%, respectively, between end-2016 and end-2017.

Polish CPI inflation slowed to 2.1% in December from 2.5% in November.

Japan’s tertiary index of service sector activity leaped 1.1% on month in November, doubling the on-year rate of increase to 1.7%. After dipping 0.4% in calendar 2014, the tertiary index recorded small increases of 0.9% in 2015, 0.7% in 2016, 0.5% in the first half of 2017 and 0.7% in the third quarter of last year.

Australian new motor vehicle sales leaped 4.5% on month and 6.7% on year in the final month of 2017. Building permits in Australia were 8.1% greater in November than a year earlier.

The Empire State manufacturing index, a regional gauge of factory activity around the New York area, slipped back 1.9 points to a 6-month low of 17.7 in January from an upwardly revised December reading.

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

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