WTI Oil Above $70 Per Barrel for First Time Since Thanksgiving 2014

May 7, 2018

Compared to closing levels before the weekend, the dollar has climbed 0.8% against the peso, 0.4% relative to the euro, 0.2% vis-a-vis the yen, Swiss franc and Australian dollar, and 0.1% vis-a-vis the yuan. Sterling and the Canadian dollar are 0.3% and 0.1% firmer, and the kiwi is unchanged.

The Indonesian rupiah weakened through the 14000 per USD barrier after GDP data released for the first quarter showed a 0.4% quarter-on-quarter contraction and lower-than-forecast on-year growth of 5.06%.

Trump via Twitter and his lawyers stepped up their counter-attack against the Russian probe led by Robert Mueller. Time is getting very short for a Trump to decide whether to leave the Iran nuclear deal. West Texas Intermediate oil appreciated another 1.0% today and is trading above $70 for the first time since Thanksgiving 2014.

The U.K. market is closed today for the early May bank holiday.  South Korea is also shut today for Children’s Day.

Share prices advanced 1.6% in Indonesia, 1.5% in China, 0.8% in Hong Kong and India, and 0.4% in Australia but closed unchanged in Japan. In Europe, stocks are up 0.9% in Germany, 0.7% in Switzerland, 0.5% in Italy but just 0.2% in Spain and 0.1% in France.

Gold is steady.

More evidence emerged of a pretty sharp deceleration of the German and wider euro area economies.

  • German industrial orders, which had slipped marginally in February, fell 0.9% in the unseasonably cold month of March. Orders fell by 2.1% in the first quarter, with comparable declines in both domestic demand and exports.
  • The German retail purchasing managers index dropped another 0.5 points to a 9-month low of 51.0 in April.
  • Euroland’s retail PMI dropped 1.5 points, moving below the expansion/or contraction line of demarcation to a 17-month low of 48.6.
  • Italy’s retail PMI plunged 5.3 points to a 21-month low of 42.7. Italy’s delicately balanced politics has become unworkable.
  • The French retail PMI ticked up 0.1 point to a 50.1, which indicates essential stagnation.
  • Investor sentiment toward Euroland, according to the monthly Sentix gauge, fell to 19.2 in May from 19.6 in April, 24.0 in March, 31.9 in February and a recent high of 34.0 last November.
  • A 3.9-point recovery in Germany’s construction purchasing managers index in April did not reverse all of the 5.7-point plunge in March and let the index at 50.9, implying a very slow rate of improvement.

The Russian services and composite purchasing manager indices for April rebounded to 2-month highs of 55.5 and 54.9 in April.

Australia’s construction PMI dropped 1.8 points in April to a 3-month low of 55.4. But the NAB-compiled Australian business conditions index for April rose 6 points to a six-month high of 21. Business confidence improved 2 points to a 3-month high of 10.

Swiss CPI inflation stayed level in April at 0.8%, matching March’s 7-year high, but core inflation slipped back 0.1 percentage point to 0.5%.

The National Bank of Romania engineered the second 25-basis point hike of its policy interest rate this year in order to promote a decline of inflation eventually back within the target corridor.

Minutes from the Bank of Japan’s Board meeting on March 8-9th revealed a communications dilemma with some policymakers worried about negative effects of prolonged ultra-stimulus but others fearing that even early planning of an exit strategy might make the goal of 2% core inflation more elusive than ever.

Austrian wholesale price inflation accelerated a half percentage point to 2.9% in April.

Czech retail sales and industrial production respectfully advanced 3.7% and 5.5% over the twelve months through March. Danish industrial production dropped 1.1% in the same one-year span.

The U.S. employment trends index compiled by the Conference Board extended its uptrend to 108.8 in April from readings of 107.37 in March, 106.5 in January and 103.9 in April 2017. U.S. stocks near mid-day were showing gains of 0.7% in the DOW and 0.5% in the S&P 500.

Mexican consumer sentiment rose about 2 points to a 4-month high of 86.45 in April.

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

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