Much To Watch Just before the Holiday
April 18, 2019
The Good Friday/Easter holiday break is ordinarily one of the quietest times for foreign exchange, but investors this year have a great deal of news to absorb before getting away: the promised redacted Mueller Report, preliminary April purchasing manager survey results, British retail sales, Australian labor statistics, German producer prices, Swiss trade, and a central bank meeting in South Korea.
The dollar is mostly but modestly firmer, with gains of 0.5% versus the kiwi, 0.4% against the euro, 0.3% relative to the yuan, Aussie dollar, peso and sterling, 0.2% vis-a-vis the loonie and 0.1% against the Swiss franc. Even stronger than the dollar has been the yen, which ticked 0.1% upward against the U.S. currency overnight.
Share prices fell 0.9% in Japan, 1.4% in South Korea, 0.4% in China, 0.6% in Hong Kong, and 0.3% in India and Taiwan. But stocks are mixed in Europe, with dips of 0.3% in Italy, 0.1% in the U.K., and 0.2% in Spain but rises of 0.5% in Germany and 0.3% in France.
Ten-year sovereign debt yields retraced some of their recent advance, dropping four basis points in the United States and Germany and two basis points in Japan and the U.K..
Commodity prices like gold and oil are little changed.
The Mueller Report on Russian interference in the U.S. 2016 election is projected to get released sometime between 11:00 EDT and noon, but Attorney General Barr plans a press conference beforehand around 09:30 am.
Japan’s preliminary manufacturing purchasing managers index posted a third straight sub-50 reading in April, connoting a deterioration of operating conditions. However, the 49.5 score after 49.2 in March and 48.9 in February indicated a slower pace of contraction. Japan’s manufacturing sector continues to struggle under the weight of trade strains and slower Chinese growth.
Euroland preliminary PMI findings proved weaker than forecast. The overall composite index fell 0.3 index points to a 3-month low of 51.3. Since November 2014, only the readings this past December and January had been lower, and the latest result is consistent with GDP growth a tad below 0.2%. The services index fell 0.8 points to a 3-month low of 52.5, while manufacturing printed below 50 (at 47.8) for a third straight time.
Germany’s composite PMI (52.1) rebounded 0.7 points on the resilience of a 7-month high in service sector activity but continued to be depressed by manufacturing weakness, where the PMI for that sector was 44.5 and below the 50 no change level for a fourth straight time.
A French composite PMI score of 50.0 in April connotes stagnation. Services rebounded 1.4 index points to a 5-month high, but the French manufacturing PMI scored only 49.6, a 32-month low.
British retail sales in March produced a big upside surprise, partly reflecting milder weather. Retail sales volume jumped 1.1% on month and by the most from a year earlier (6.7%) since October of 2016. Sales in the first quarter climbed 1.6% from 4Q and 5.0% on year. Excluding auto fuel, sales volume went up 1.2% in March and 1.4% in 1Q, with respective year-0n-year increases of 6.2% and 4.8%.
Australia’s unemployment rate returned to 5.0% in March after dipping to 4.9% in the prior month. Other elements of the monthly labor force survey were stellar, however. Employment grew 25.7K, including 48.3K full-time workers, and the labor participation rate increased 0.1 percentage point to 65.7%.
German producer price inflation slowed unexpectedly to an 11-month low in March of 2.4% from 2.6% in the first two months of this year and a recent high of 3.3% in November. Half of the 2.4% was attributed to energy costs. Non-energy PPI inflation slid to 1.2%.
Switzerland’s CHF 2.494 billion trade surplus last month represents a 4-month high. The first-quarter surplus of CHF 6.2 billion was 55% greater than a year earlier.
As expected, the Bank of Korea’s 1.75% base rate was left unchanged. This represents an “accommodative” stance, according to a released statement. Officials argue that “it is expected that the domestic economy will continue to grow at a rate that does not diverge significantly from its potential level, and it is forecast that inflationary pressures on the demand side will not be high.” To wit, revised forecasts accompanying this scheduled review of monetary policy bumped projected growth this year down 0.1 percentage point to 2.5% and projected CPI inflation down 0.3 percentage points to 1.1%. The Bank of Korea implemented a pair of 25-basis point rate hikes in November 2017 and November 2018. Not only does it look increasingly like there will not be a third increase this year, but speculation has in fact risen that the next change may in fact be a cut. Prior to the two aforementioned base rate increases, five reductions, all also by 25 bps, were engineered from March 2014 to June 2016.
In other news today,
Hong Kong’s jobless rate printed at 2.8% in the first quarter, its level over the past year.
Irish PPI deflation moved in to a 4-month low of 6.8% in March from an on-year decline of 9.4% in February.
Polish PPI inflation slipped back to a 2-month low of 2.5% in March, but Polish on-year growth in industrial production of 5.6% that month surpassed market expectations.
The National Australia Bank’s first-quarter indices for business conditions and business confidence moved down 5 and 2 points to +4 and -1, respectively.
Dutch unemployment slipped 0.1 percentage point to 3.3% in March. In the same month, Swedish unemployment rose half a percentage point to a 9-month high of 7.1%.
Italian industrial orders recorded the biggest month-on-month drop (2.7%) in five months and were 2.9% lower than a year earlier in February.
U.S. and Canadian retail sales are due momentarily. The U.S. Philly Fed manufacturing index and the Conference Board’s U.S. index of leading economic indicators also arrive today.
Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Australian labor statistics, Bank of Korea interest rate, Euroland and Japanese PMI surveys, German PPI, Mueller Report
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