Released Current Account Data and Some Central Bank Decisions
September 19, 2018
The dollar is steady to mostly softer. North America’s stock market rally on Tuesday carried over into Asia and Europe. The ten-year British gilt yield edged up 2 basis points, and gold firmed 0.4%. Oil is steady, as are German bunds and Japanese JGBs.
New Zealand recorded a larger-than-forecast NZD 1.619 billion current account deficit last quarter. The deficit from mid-2017 to mid-2018 equaled 3.3% of GDP.
Euroland’s seasonally adjusted current account surplus contracted to EUR 21.3 billion in July from EUR 23.8 billion in June, EUR 24.6 billion in May, EUR 29.7 billion in April and EUR 36.0 billion in May. But Italy, which reported separately, bucked that trend. Italy’s current account equaled a surplus of EUR 8.607 billion, up from EUR 5.338 billion in June and EUR 7.864 billion in July 2017.
The U.S. current account deficit narrowed sharply as had been anticipated in the second quarter, printing at $101.46 billion, a 3-quarter low and equal to -2.0% of GDP. The main source of this decline was a $17.6 billion contraction in the merchandise trade deficit. The surplus from services also widened, and the first-quarter current account deficit got revised inward to $121.71 (-2.4% of GDP) from $124.1 billion estimated three months ago.
Japan’s customs clearance trade balance swung from a JPY 97 billion surplus in August 2017 to a JPY 445 billion last month. A second straight seasonally adjusted deficit resulted in August. At JPY 190 billion, such was significantly larger than the JPY 102 billion deficit in July.
The Bank of Japan left all elements of its very stimulative monetary policy unchanged, including a negative 0.1% short-term interest rate, a zero percent target on the 10-year JGB yield, and annual JGB purchases of roughly 80 trillion yen. Governor Kuroda asserted that unconventional stimulus will continue until the 2% inflation target is attained and maintained that the limits of policy stimulus have not yet been exhausted.
The Bank of Thailand’s one-day repo rate was kept at 1.5%, but there were two dissenting votes favoring a 25-basis point hike rather than just one such vote at the June policy review. Inflation of 1.6% lies below the 1-4% target midpoint, and Thailand has a current account surplus. The key central bank rate has been at 1.5% since a pair of 25-basis point cuts in the early spring of 2015. The rate was earlier reduced 150 basis points in six moves from November 2011 to March 2014.
British consumer price inflation accelerated unexpectedly to 2.7% in August from 2.5% in July and 2.4% in May. Core CPI also rose 0.2 percentage points to 2.1%, but both producer output inflation of 2.9% and producer input inflation of 8.7% were lower than in July.
South African CPI inflation unexpectedly slid to a 2-month low of 4.9% in August from a 10-month high of 5.1% in July.
Malaysian CPI inflation of just 0.2% last month was the lowest pace since February 2015.
Portuguese PPI inflation of 4.6% last month surpassed a 12-month increase of 4.4% in July.
Construction output in the euro area rose 0.3% in July and was 2.6% greater than a year earlier. That almost matches the first-half 2018 year-on-year increase.
U.S. housing starts and building permits will be reported later today.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan, British CPI and PPI, Euroland current account, U.S. current account