Dollar Trims its Thursday Losses

June 21, 2019

Today’s session illustrates America’s challenge sustaining a depreciating trend the dollar, which recovered overnight by 0.4% against the kiwi and sterling, 0.3% relative to the peso, 0.2% versus the yuan and Australian dollar and 0.1% vis-a-vis the yen and Swiss franc. But the dollar managed to lose another 0.2% against the euro and 0.1% versus the loonie.

The dollar generally benefits from geopolitical tension like overnight news that President Trump had ordered a military strike on Iran, only to then call such off. Such vacillation on matters of war creates a lot of uncertainty and uneasiness.

Share prices in the Pacific Rim dropped 1.0% in Japan and India and 0.6% in Australia but rose 0.5% in China. European markets are up a tad in the U.K., France, and Italy, unchanged in Germany, and down in Switzerland.

Nervousness about the conflict involving Iran sent West Texas Intermediate crude oil up 0.9% to $57.90 per barrel versus Monday’s close below $52 per barrel, and the price of gold on the Comex is hovering just below $1400 per ounce, up more than $100 since the end of May.

Ten-year sovereign debt yields rose two basis points in Germany and the U.K. and by a basis point overnight in Japan.

Japanese CPI inflation decelerated in May, dipping overall from a 6-month high of 0.9% in April to 0.7% in May. Excluding perishable food, Inflation slid 0.1 percentage point to 0.8%, and the core-core CPI that also excludes energy dipped to 0.5% from 0.6%.

Some preliminary purchasing manager survey findings for June based on 85-90% of all information were released.

  • Japan’s manufacturing PMI fell 0.3 index points to a 3-month low of 49.5, marking the fourth time in five months that such was below the neutral 50 level. Orders contracted at the fastest speed in 3 years, and the order backlog was the smallest since early 2013.
  • Euroland’s composite PMI rose 0.3 points to a 7-month high of 52.1, powered by the service sector. The euro area’s manufacturing PMI only ticked 0.1 point higher and at 47.8 was below the 50 level for a fifth straight time in June.
  • Euroland’s faster improvement in economic conditions this month, moreover, was very concentrated in France, which posted a 7-month high of 52.9, and Germany’s 52.6 reading that matched May’s 3-month high. The collective PMI of all the other economies in the euro zone dropped to the lowest level since November 2013, and business optimism about the coming year in all of Euroland was at its weakest since late 2014.
  • The Australian composite PMI compiled by the Commonwealth Bank of Australia improved 1.6 points in June to a 7-month high of 53.1, having touched 49.5 just three months earlier.

Japanese department store sales recorded a 0.8% 12-month rate of decline in May after a drop of 1.1% the month before. In each month of the first quarter, in contrast, sales recorded on-year increases.

Britain’s public sector net borrowing total in May of GBP 4.46 billion was 27% greater than a year earlier. Outstanding government debt at end-May equaled 82.9% of GDP.

CPI inflation in Hong Kong decelerated to a 2-month low of 2.8%. Hong Kong also announced that it had experienced a HKD 36.6 billion current account deficit last quarter, which was about twice the size of the surplus in the first quarter of 2018.

Spain’s trade deficit in April amounted to EUR 1.6 billion compared to EUR 3.0 billion a year earlier.

U.S. existing home sales data and Canadian retail sales get reported later today.

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

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