Stronger Canadian Dollar

June 28, 2018

Today’s major dollar change has been a decline against other North American currencies. The loonie is up 0.7%, as investors have become more confident that the Bank of Canada will raise its interest rate after the July Board meeting. The Mexican peso has also strengthened.

Against other currencies, the dollar shows no net change against the Swiss franc and Japanese yen, a 0.2% dip relative to the euro, a 0.2% uptick versus sterling, and a 0.5% gain relative to the kiwi, following the Reserve Bank of New Zealand’s Board meeting. Officials there kept their Official Cash Rate unchanged at a record low 1.75% and issued a statement that asserted, “the best contribution we can make to maximising sustainable employment, and maintaining low and stable inflation, is to ensure the OCR is at an expansionary level for a considerable period.”

There’s been little change through noon in U.S. share prices. The Nikkei closed unchanged, but the German Dax and Paris Cac sank by 1.4% and 1.0%. Spain’s market also fell appreciably, but the British Ftse was little changed.

Ten-year British gilt and U.S. Treasury yields firmed two basis points, while 10-year Japanese JGBs and German bunds stayed flat.

Oil’s resurgence continued with another 1.0% advance in the price of WTI crude. Gold is 0.4% softer.

U.S. real GDP growth in the first quarter was revised down 0.2 percentage points to 2.0% due to lower growth in personal consumption and exports. The PCE price deflator recorded a 2.6% on-year increase (1.6% for core).

Euroland economic sentiment slipped less than forecast to a 9-month low of 112.5 in May. Confidence among consumers, in industry, retail, and services slipped to 8-,  10-, 11-, and 2-month lows.

German consumer confidence retained a 10.7 reading in July, lowest since last December. German CPI inflation subsided to 2.1% in June despite an acceleration of the energy component.

Portuguese consumer confidence also slipped in June. The common threat is U.S. President Trump’s America First trade threats and disregard of international law. Swedish retail sales last month were 3.1% greater than a year earlier.

Japanese retail sales retreated more sharply in May than expecting, dropping by 1.7% on month and reversing April’s encouraging advance.

South African PPI inflation ticked up 0.1 percentage points to 4.6% in May.

The Kansas City manufacturing index dipped a point in June to a 2-month  low of 28.

The biggest U.S. storyline today is the announced retirement of Supreme Court Justice Kennedy, who heretofore has been the swing vote on many issues including abortion.

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



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