Investors Sifting Through Diverse Array of Market Movers

August 23, 2018

The dollar rose 0.8% against the Aussie dollar, 0.3% relative to the Mexican peso and kiwi, 0.2% versus the yen, and 0.1% against the euro and sterling. The dollar slipped 0.3% against the Chinese yuan, 0.2% relative to the Swiss franc and 0.1% vis-a-vis the loonie.

Stock markets in European and Asia have also produced mixed results, with gains of 1.6% in Singapore, 0.7% in Indonesia, 0.6% in Taiwan, 0.4% in China and 0.2% in Japan but losses of 0.3% in Australia and Hong Kong and 0.2% in in New Zealand. Stocks are also down 0.5% in Italy, 0.2% in Spain, and 0.1% in Switzerland and Germany. The British Ftse is flat.

There have been one-basis point upticks in the 10-year British gilt and U.S. Treasury yields but no change in their German and Japanese counterparts.

Gold fell back below $1200 per ounce for a net overnight loss of 0.5%. Oil is only 0.1% firmer after yesterday’s news of a strong drop in U.S. inventories.

There’s a new foreign object of Trump’s animosity — South Africa. His Secretary of States has been asked to check into the South African government’s harassment of farmers. Rand weakness continues.

Confusion persists over Trump’s legal and political situations after the conviction of his former campaign chairman and the guilty plea of his personal lawyer. The president has been holding political rallies meanwhile and been as defiant as ever.

The central banker symposium at Jackson Hole begins today. FOMC minutes released yesterday accentuate the strong growth trends in U.S. jobs and GDP. The Fed appears on track to enact an eighth interest rate hike at next month’s policy review. Trump has begun to criticize the speed of Fed policy normalization. This rhetorical interference is likely to get louder.

Preliminary August purchasing manager surveys for Euroland, Germany and France released today show more resilient activity and inflationary pressure than analysts were anticipating. The German, French and Euroland composite PMI activity indices rose to 6-, 4-, and 2-month highs of 55.7, 55.1, and 54.4. Real GDP in the common currency area should expand this quarter by at least 0.4%, but business confidence in the future is slipping in the face of trade tensions.

Japan’s manufacturing PMI rose 0.2 points to a 2-month high of 52.5 in August, but business sentiment was at its lowest reading since November 2016.

The British distributive trades index rebounded to a reading of 29 in August after dropping by 12 points in July to 20. Sentiment toward sterling remains troubled, however, on fears of a bad Brexit deal or the possibility of no deal.

On-year growth in Swiss industrial production accelerated to 8.3% in the second quarter from a downwardly revised 6.8% in 1Q.

Japan’s index of leading economic indicators in June got revised downward to a 15-month low of 104.7 from 105.2 reported initially and 106.9 in May. The indices of coincident and lagging economic indicators posted 3- and 9-month lows.

Singaporean CPI inflation remained at 0.6% in July, matching June’s 7-month high. Core CPI was 1.9%.

French business sentiment rose unexpectedly to a 3-month high in August according to the government’s statistical agency.

Danish consumer confidence dropped for a second straight month in August to a 4-month low.

Norwegian GDP grew 0.4% on quarter and 3.3% on year in the second quarter.

Spain accrued a EUR 14.59 billion trade deficit in the first half of 2018, which was 31.5% wider than a year earlier as import growth of 5% surpassed the 2.9% rise of exports.

U.S. data releases scheduled today are new home sales, the FHFA house price index, the KC Fed manufacturing index and weekly jobless insurance claims. Euroland consumer sentiment is due, too.

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



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