Dollar Down, Stocks Mixed Ahead of Powell’s Speech at Jackson Hole

August 24, 2018

The dollar posted overnight declines of 0.7% against the Aussie currency, 0.5% relative to the Chines yuan, 0.4% against the kiwi, 0.3% vis-a-vis the euro and sterling, 0.2% versus the Mexican peso and Swiss franc and 0.1% relative to the loonie.

Share prices in the Pacific Rim rose 0.9% in Japan, 0.5% in South Korea, 0.3% in New Zealand, and 0.2% in China but fell by 1.1% in Singapore, 0.5% in Taiwan, 0.3% in Hong Kong and 0.2% in India and Indonesia. In Europe, stocks have fallen 0.8% in Greece but otherwise show gains thus far of 0.8% in Italy, 0.5% in Spain and France and 0.2% in the U.K. and Germany.

Fed Chairman Powell delivers today’s key speech at 08:00 local time (10:00 GMT) at the Jackson Hole central banker symposium today. The conference, however, is likely to yield less market-moving news this year than usual, as the chiefs of the European Central Bank, Bank of England, and Bank of Japan are not attending. Those coincidental absences perhaps reflect the declining global leadership of the United States.

America’s isolation has also been underscored by the failure of the latest round of Sino-U.S. trade talks to yield progress.

Ten-year German bund and British gilt yields are steady, while their U.S. and Japanese counterparts edged up a basis point.

West Texas Intermediate crude oil continued to rally in response to this week’s report of a greater-than-expected drop in inventories last week. WTI rose another 1.3% to 68.71 per barrel. Comex gold firmed 0.3% but not quite enough to cross the $1,200 per ounce level.

Higher energy costs this year have been a major factor lifting inflation. An 8.4% on-year advance in Swedish producer prices in July was the most since September 1995. Finnish PPI inflation of 6.1% was just a tad under June’s 6.2% but well above the 2.2% pace back in February. And Spanish producer price inflation, which had been zero as recently as January, accelerated further to 4.6% in July from 4.1% in June, 3.0% in May and 1.8% in April.

German second-quarter GDP data confirmed quarter-on-quarter growth of 0.5%, a 2.3% advance from a year earlier, and on-year growth of 2.0% after adjusting for variations in the number of business days in the quarter. Net foreign demand exerted a 0.4 percentage point drag on quarterly growth, but that effect was neutralized by an equally positive lift from inventories. In the on-year comparisons, good-sized advances were reported in all components of demand. Employment rose 1.4% on year, and per capital labor productivity went up 1.0%.

Japanese total CPI inflation climbed 0.2 percentage points to a 4-month high of 0.9% in July. Core CPI, which excludes fresh food, remained steady at 0.8%, and the CPI excluding both energy and perishable food edged up 0.1 percentage point to a 12-month increase of 0.3%. Energy prices were 5.8% higher than a year earlier.

Japanese corporate service price inflation stayed at 1.1% in July but was up from 0.7% in January.

On-year growth in Singapore’s industrial production slowed from 13.0% in May to 8.0% in June and a 7-month low of 6.0% in July when such posted a month-on-month decline for the first time since February.

Malaysian CPI inflation rebounded from a 40-month low of 0.8% in June to 0.9% in July.

New Zealand recorded a NZD 143 million trade deficit in July, which lifted the shortfall over the last twelve reported months to NZD 4.441 billion. On-year import growth of 21.3% outpaced a 15.8% rise in exports.

Norway’s jobless rate of 3.9% in July was 0.4 percentage points lower than a year earlier. Polish joblessness stayed steady in June at 5.9%.

Danish retail sales fell 0.3% on month and 0.5% on year in July. Both changes constituted the weakest ones since April.

Austrian on-year growth in industrial production slowed to a 2-month low of 5.0% in June.

While business sentiment in the Czech Republic improved to a 2-month high in August, consumer confidence fell to an 8-month low.

U.S. durable goods orders, Mexican GDP and current account figures, and the euro area’s index of leading economic indicators will be reported today.

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


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