Dollar Little Changed as Global Stocks Turn Lower Again

January 22, 2019

The dollar is unchanged against the Swiss franc, down 0.2% versus the yen, sterling and peso, off 0.1% relative to the euro, and up 0.1% vis-a-vis the kiwi and yuan. Larger gains have been notched of 0.4% against the loonie and 0.3% versus the Australian dollar.

Equities in the Pacific Rim fell 1.2% in China, 1.0% in Hong Kong, 0.9% in Singapore, and 0.5% in Japan, Australia and New Zealand. European stocks so far have dropped 0.8% in Italy and the U.K. and 0.5% in Germany, France, and Switzerland. At the U.S. opening, the Dow was marked down 0.7%.

Ten-year sovereign debt yields reflect investor pessimism with declines of four basis points in the U.S., 2 bps in Germany and a basis point in Japan.

West Texas Intermediate crude oil is 2.2% weaker at $52.69 per barrel. Gold firmed 0.2%.

Released economic data revealed an unexpected recovery in the monthly ZEW Institute’s measures of investor expectations regarding the German economy to a 4-month high and the Euroland economy to a 3-month high, but the ZEW gauge of perceived current conditions slumped sharply in both cases.

The Bank of Japan’s trimmed mean and weighted median measures of underlying Japanese consumer price inflation each slipped 0.1 percentage point in December to 0.4% and 0.0%, respectively.

South Korean producer price inflation slowed to 1.0% in December from 1.5% in November and 3.1% as recently as August. South Korean average GDP growth in 2018 of 2.7% constituted a 6-year low, and the 3.1% fourth quarter-over-fourth quarter rate of growth was the weakest on-year advance since the summer of 2009.

CPI inflation in Hong Kong decelerated to a 2.5% on-year pace in December, a 4-month low.

The 12-month drop in Irish producer prices, 9.9%, was twice as high in December as November’s result. In the year to August, moreover, the PPI was just 0.9% below its year-earlier level.

Belgian consumer confidence posted a 26-month low in January, and Dutch consumer sentiment collapsed from a reading of +23 last July to 9.0 in December and a mere +1.0 this month, which represents a 47-month low.

Portugal had its first monthly current account deficit in five months in November, and Greece’s current account deficit that month was 63% wider than the month before.

Canadian factory sales sank 1.4% on month in November, slashing the on-year increase by two-thirds and lifting the inventories-to-manufacturing sales ratio further.

British jobless insurance claims increased by at least 20K for a fourth straight month in December even though the ILO-basis jobless rate in September-November dipped to just 4.0%, lowest since 1974. Average wage earnings ticked up 0.1 percentage points to 3.4% due to bonus pay. British public sector borrowing over the first three fourths of the current fiscal year (April-December) was 25.6% less than a year earlier, but the outstanding debt level remains high at 84%.

New Zealand’s service sector purchasing managers index fell in December to a 6-month low, and the survey revealed the lowest measure for sales since May 2014.

South Africa’s index of leading economic indicators weakened for the fourth time in five months during November and was 1.2% below the midyear level.

U.S. existing home sales sank below the 5.0 million level for the first time in 2018 in the year’s final month. There was a much greater-than-forecast 6.4% monthly decline to a 37-month low, and on-year declines amounted to 10.3% in December and 3.1% in full-2018.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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