Muted Overnight Moves in Dollar but Share Prices Up

March 15, 2019

The dollar this Ides of March is unchanged from Thursday closing levels against the yen, loonie and Swiss franc. The dollar fell 0.2% against the euro, sterling and Australian and New Zealand dollars and by 0.1% versus the yuan.

Share prices rose 1.3% in China, 0.8% in Japan, and 0.6% in Hong Kong and show gains between 0.5% and 1.0% relative to the German Dax, Paris Cac and British Ftse.

The price of WTI oil is slightly above $58.8 billion and holding onto yesterday’s gain, while Comex gold has risen 0.6%.

Ten-year German bund and British gilt yields firmed a basis point.

There’s been two shootings with 49 dead at mosques in Christchurch on New Zealand’s South Island.

The latest Bank of Japan policy review as expected left targets for the overnight interest rate (-0.1%), the 10-year JGB yield (around 0%), and other quantitative elements of that central bank’s easy stance unchanged. In a released statement, Board members did downgrade their views of global growth and Japanese exports and industrial production, observing recent weakness in each instance. Forward guidance wasn’t changed:

The Bank will continue with “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. As for policy rates, the Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in October 2019.

As before, two of the nine board members, Harada and Kataoka, dissented in favor of greater monetary stimulus, but Governor Kuroda in the subsequent press conference rejected such a need, noting that domestic demand continues to rise and insisting that the likeliest future scenario is one in which Japan’s economy continues its moderate expansionary trend. By the same token, he defended the bank’s negative short-term interest rate, which has drawn criticism from business and some government officials, saying that the existing policy mustn’t be ended before 2% inflation has been achieved and reiterating that the mission is taking longer than had been foreseen but that it will succeed eventually.

Consumer prices in the euro area rose 0.3% both overall and in the core measure during February. On-year total inflation edged up 0.1 percentage point to 1.5% but remained will below a recent high of 2.3% last October. Moreover, core underlying inflation that excludes food and energy dipped 0.1 percentage point 1.0%, which also matches the pace in the previous 12 months through February of 2018.

German wholesale prices went up 0.3% last month as mineral oil products jumped 0.9%. The WPI was 1.6% higher than a year earlier, down from a 12-month 4.0% rate of increase last October.

Chinese new home prices rose 0.5% on month in February, a 10-month low, but notched a 10.4% year-on-year advance, most in 21 months.

Italian consumer prices rose 0.1% on month in February, lifting the 12-month increase from January’s 9-month low of 0.9% by 0.1 percentage point to 1.0%. Italian industrial orders recorded a third consecutive on-year decline in January. The drop was 1.2% after declines of 4.7% in December and 2.2% in November. Industrial sales were 0.6% higher in January than a year earlier.

Dutch retail sales in February posted their smallest year-on-year increase (1.6%) in ten months. The Dutch trade surplus in January of EUR 2.868 billion was down from EUR 3.66 billion in December and EUR 3.2 billion a year earlier.

Irish GDP grew 6.7% last year versus 7.2% in 2017. Ireland’s current account surplus of EUR 28.996 billion in 2018 was bigger than the prior year’s surplus of EUR 24.924 billion.

Consumer prices in the year to February rose 1.5% in Austria, 1.2% in Poland but 5.0% in Cyprus.

Turkish unadjusted unemployment ended 2018 at a rate of 13.5% versus 10.4% in December 2017. The seasonally adjusted jobless rate climbed 0.6 percentage points on month to 12.7% in December.

New Zealand’s manufacturing purchasing managers index recovered 0.6 index points to 53.7 in February but remained below December’s 6-month high of 55.1.

Investors now await U.S. data for industrial production, capacity usage, job hires and separations, consumer sentiment a la the U. Michigan index, and the empire state manufacturing index. Canada will be reporting existing home sales and the monthly survey of manufacturing orders, sales and inventories.

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

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