Dollar Up against Turkish Lira but Down Versus Mexican Peso

August 27, 2018

There’s been little net movement of the dollar against the euro (+0.1) or yen (-0.1%), loonie (+0.1%), or Aussie and New Zealand dollars (0.2). Sterling and the Swiss franc are each unchanged from closing levels before the weekend.

Gold and oil are 0.3% and 0.4% softer.

The 10-year German bund yield edged up a basis point. Its British and Japanese counterparts remain unchanged.

Trading in the Turkish currency, which had been suppressed by religious holiday last week, kicked back into a more frenetic pace, with the lira sliding to an intra-day low of 6.299 per USD. The’s current net gain is 3.6%. The dollar also has advanced 0.6% against the South African rand and 0.5% relative to the Indian rupee. In contrast, the dollar has fallen 0.5% against the Mexican peso on reported further progress in U.S.-Mexican NAFTA talks.

Stock markets in Europe and the Pacific Rim have mostly done well, with advances of 2.6% in Hong Kong, 1.9% in China, 1.2% in India, 1.0% in Indonesia, 0.9% in Japan, and 0.5% in New Zealand. European bourses so far are up by 0.6% in Germany, 0.5% in France, 0.3% in Spain, and 0.2% in the U.K.. The disturbed state of Italian politics has depressed stocks in that country by another 0.5%, however.

The Jackson Hole Symposium produced few market-moving news. Fed Chairman Powell’s speech, while reinforcing expectations of two more rate hikes in 2018, was somewhat less hawkish than anticipated. The Treasury yield curve afterward hit its flattest slope in 11 years. Bank of Governor Poloz talked about the difficulty of interpreting inflation data in the digital shopping age and warned that waiting for conventional inflationary signs to appear risks central banks falling behind the curve.

The main data release so far today has been the monthly IFO German business climate index, which unexpectedly jumped 2.1 points to 103.8, a six-month high in August. Both current conditions and future expectations improves, reaching 5- and 7-month peaks. The sector measures for manufacturing, services, trade, and construction rose to 4-, 8-, 2-, and record highs, respectively.

Finnish consumer confidence, on the other hand, slid 0.5 points to a 16-month low of 21.5 in August. That’s down from a reading of 29.7 last March.

Chinese industrial profits recorded their smallest on-year rise in four months during July, just 16.2%. Such on average had risen 17.2% on year during the first half of 2018.

Hong Kong’s trade deficit of HKD 321.5 billion in January-July was 9.4% larger than a year earlier. July alone saw a deficit of HKD 47.11 billion.

The latest monthly readings of the Chicago Fed National Activity Index and Dallas Fed manufacturing index are scheduled for releases later today.

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


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