Softer Dollar and Share Prices

July 25, 2018

The dollar fell 0.8% overnight against the peso and 0.5% versus the yuan, and it has slipped 0.3% against the loonie, 0.1% vis-a-vis the Australian dollar, and 0.2% relative to the yen, euro, Swiss franc, kiwi, and sterling.

Share price losses amount to 0.3% in Taiwan and South Korea, 0.8% in the U.K., 0.6% in Germany, and 0.5% in Spain. The DOW is down, but the S&P is up. The Nikkei rose 0.5%.

Comex gold and WTI oil rose 0.7% and 0.3% so far today.

The 10-year U.S. Treasury and Japanese JGB yields dipped a basis points, and their German and British counterparts are steady.

The German business climate index only slipped 0.1 point further in July, a tad less than the expected drop, as current conditions unexpectedly performed a touch better. Construction improved to a record high, but trade and manufacturing deteriorated further. At 101.7, IFO’s business climate index conveys a positive but slower pace of expansion seen prior to the threat of a trade war.

Likewise, Euroland’s index of leading economic indicators went up 0.3% in June, down from May’s advance of 0.7%.

And the Credit Suisse ZEW Expectations index, a gauge of investor sentiment toward Switzerland, worsened 12 points in July to a reading of minus 4.

M3 money growth in the euro area accelerated to 4.4% on year in June, so that the second quarter growth rate of 4.1% was just 0.1 percentage point lower than the first-quarter’s outcome. Loans to non-financial firms also picked up a bit, recording a 4.1% on-year advance after 3.7% in May.

Australian CPI inflation rose 0.2 percentage points to 2.1% last quarter, its second highest pace since the second quarter of 2014. Inflation was also at 2.1% in the first quarter of last year. But core inflation printed below 2% at 1.9%.

New Zealand recorded a NZD 113 million trade deficit in June and posted a cumulative NZD 4.03 billion deficit between mid-2017 and mid-2018.

The Central Bank of Chile’s monetary policy rate was left unchanged at 2.5%, the level since a series of four 25-basis point cuts during the first five months of 2017. Officials released a statement that foresees the MP rate returning to a neutral level within a few quarters.

Consumer confidence in South Korea dropped 5 points to print at 101 in July.

In the year to June, producer prices rose 8.0% in Sweden, 4.1% in Spain and 3.4% in France. All these 12-month rates of increase were higher than those in May. French consumer price inflation in June got revised down 0.1 percentage point to 2.0%.

Belgium suffered a loss of business sentiment in all key sectors this month as attested by the Business Climate Index, which swung to a reading of minus 1.3 from plus 0.6.

Mexican retail sales and wholesale turnover in May were 2.5% and 6.5% greater than a year earlier.

U.S. new home sales sank 5.3% to their lowest number (631K) in June since last October. Sales were just 2.4% greater than in June 2017.

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

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