Little Change Overnight in Most Dollar Forex Values

May 17, 2018

Against other major currencies, the dollar is unchanged against the loonie and yuan, up 0.1% relative to the euro, Swiss franc and kiwi, up 0.3% versus the yen, but down by 0.1% against the Australian dollar and sterling.

Bigger dollar moves have occurred against emerging market currencies. The greenback dropped 0.3% against the Indonesian rupiah after Bank Indonesia engineered its first interest rate hike in 3-1/2 years. That tightening is intended to support the rupiah, which earlier this year had fallen about 5%. Meanwhile, the dollar appreciated today by 0.6% relative to the Turkish lira and South African rand and 0.5% vis-a-vis the Polish zlotty.

Stock markets in the Pacific Rim mostly lost ground, declining 0.7% in Hong Kong and India, 0.9% in Indonesia, 0.6% in Taiwan, and 0.5% in China and South Korea. But Japan’s Nikkei recovered 0.5%, and European share prices thus far are up 0.4% in France, Spain and Greece and 0.2% in Germany and Britain.

In politically stalemated Italy, stocks dropped another 0.3%, and the 10-year sovereign debt yield jumped another four basis points. The 10-year British gilt yield rose 3 basis points, and the 10-year Treasury yield briefly touched a new high for the move of 3.10% but is currently unchanged from Wednesday’s close.

Gold fell another 0.3%, while WTI oil climbed 1.0% and is above $72.00.

Officials at Bank Indonesia had left its interest rates at each of the previous seven policy reviews but today raised the 7-day reverse repo rate, the deposit rate and its overnight lending rate all by 25 basis points to 4.50%, 3.75% and 5.25%, respectively.

Producer output price inflation in New Zealand slowed to 3.5% last quarter from 4.7% in the last quarter of 2017 and 5.3% in 3Q17. Producer input price inflation subsided to 4.3% from 4.6% and a 2017 high-water mark of 5.0% in the second quarter of that year.

On the heels of Wednesday’s revelation that Japanese real GDP contracted in the first quarter, today’s March machinery orders data also undershot market expectations. Core domestic demand fell 3.9% on month in March and were 2.4% less than a year earlier. Public sector orders and export orders respectively dropped 5.2% and 7.2% on month in March and by 6.4% and 1.7% in the first quarter.

Australian labor statistics for April were mixed. While 22.6K jobs were created on net including 32.7K full-time positions, unemployment rose 0.1 percentage point to 5.6%.

Construction output in the euro area declined in each month of the first quarter. After back-to-back 0.7% drops in January and February, there was a 0.3% slide in March, which left construction only 0.8% above the March 2017 level. That’s down from on-year increases of 2.5% in the whole first quarter and 3.9% in full-2017.

Icelandic CPI swung from a 12-month 0.3% rate of increase in March to an 0n-year 0.7% decline in April.

News of a wider EUR 4.531 billion Italian trade surplus in March didn’t help Italian financial markets, which are reeling from the inability of the right-wing League and the upstart Five Star parties to agree on a common manifesto for a coalition government. The dispute centers on Italy’s relationship with the EU.

On-year Malaysian GDP growth slowed from 6.2% in 3Q17 and 5.9% in the final quarter of last year to a 5-quarter low of 5.4% in 1Q18. The slowdown was broad-based, but Malaysia recorded a larger MYR 14.98 billion current account surplus versus MYR 13.92 billion in the final quarter of 2017.

Wholesale turnover in South Africa was 0.7% lower in March than a year earlier. Turkish retail sales that month recorded an increase of 7.4% from a year earlier.

Dutch unemployment remained at a low 3.9% in April. Hong Kong unemployment last month was even lower at 2.8% versus 2.9% in March.

Weekly U.S. jobless insurance claims and the U.S. monthly index of leading economic indicators will be reported shortly. The Trump administration did not respond in a hostile way to North Korea’s second thoughts about a Kim-Trump meeting in June.

The Bank of Mexico is review its policy stance today.

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


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