Mixed Market Action This Friday

February 23, 2018

The dollar fell overnight by 0.4% versus the peso, 0.3% against the yuan and sterling and 0.2% relative to the loonie but rose 0.5% against the kiwi, 0.1% versus the yen, and 0.2% vis-a-vis the euro, Swiss franc and Aussie dollar.

Likewise, while Asian equities enjoyed a strong session, ones in Europe failed to retain that momentum. Stocks closed up 1.5% in South Korea, 1.2% in Hong Kong and Taiwan, 1.3% in Singapore, 1.1% in India, 0.8% in Australia, 0.6% in China and 0.7% in Japan. But equities in Europe currently show overnight losses of 0.7% in Spain and Greece, 0.4% in Switzerland, and 0.2% in Great Britain. The German and Italian bourses have managed to edge 0.1% higher.

Among commodities, oil has slipped 0.2%, copper has slumped 1.0%, but gold is flat.

Ten-year sovereign debt yields show a more consistent pattern, with German bunds dropping 4 basis points and British gilts and U.S. Treasury futures off 3 bps apiece. The 10-year Japanese JGB yield remains unchanged at 0.04%.

Thanks to a 6.7% on-year rise in energy, Japanese overall consumer price inflation accelerated to 1.4% in January from 1.0% in December, 0.6% in November and 0.2% in October. Non-fresh food CPI stayed level at 0.9%, consumer price inflation excluding both perishable food and energy bounced up to 0.4% after dropping 0.2 percentage points in December to 0.3%.

Japanese corporate service price inflation slowed to 0.7% in January, a 6-month low, after three straight readings of 0.8%.

Consumer price inflation in the euro area was confirmed at 1.3% in January. Overall prices fell 0.9% on month. Whereas energy prices increased 1.8% versus December, all other consumer prices collectively dropped 1.2% on month. Core inflation of 1.0% in January was little changed from the 1.1% pace in the previous year through January 2017.

German GDP grew last quarter at a 0.6% non-annualized pace but was unbalanced in composition. Most of the impetus came from net foreign demand, none from private domestic demand, and a mere 0.1 percentage point from government expenditures. On-year growth was dampened somewhat by fewer working days in 4Q17 than 4Q16. When corrected for that distortion, real GDP posted a four-quarter increase of 2.9% in 4Q, up from 2.7% in 3Q, 2.3% in 2Q, 2.1% in the first quarter of last year, and 1.8% in the year through the final quarter of 2016. For 2017 as a whole, real GDP went up 2.5% when adjusted for calendar year variations in working days.

In the year to January, there was zero net CPI inflation in Singapore, and Spanish producer prices edged up only 0.1%. Austrian CPI inflation of 1.6% was down from a 2.2% on-year increase in December.

Retail sales in New Zealand were 5.4% higher in 4Q17 than a year earlier. Danish retail sales in January surpassed their year-earlier level by 1.6%.

Dallas Fed President Kaplan endorsed the plan of the central bank gradually raising its interest rate this year.

No significant U.S. data releases are on tap today, but Canada will report consumer prices, and Colombia’s central bank is holding a monetary policy meeting. The 2018 Winter Olympics end this weekend.

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

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