Lots of Data Out but Dollar Marking Time Ahead of FOMC Announcement

July 31, 2019

The dollar is unchanged against the euro, Swiss franc, yen, loonie and yuan, 0.2% softer relative to the peso and Australian dollar, 0.1% lower versus sterling and 0.2% higher against the kiwi. Analysts expect a 25-basis point federal funds cut to be announced at 18:00 GMT, and Chairman Powell will begin his press conference at 18:30 GMT. Monetary policy announcements today are also being awaited from Brazil and South Africa.

Ten-year sovereign debt yields have eased a basis point in the U.S., U.K., and Germany.

The prices of WTI oil and Comex gold are 0.8% and 0.1% firmer.

Share prices have fallen 0.9% in Japan, 1.4% in Hong Kong (whose market closed early ahead of a typhoon), 1.5% in Singapore, and 0.7% in China and South Korea. In European trading, stocks are up marginally in Germany and France but down 0.6% in Great Britain.

Euro area GDP rose 0.2% last quarter, just half as much as in the first quarter of 2019, and this dampened year-on-year growth to 1.1%, lowest since late 2013 and just half as much as the 2.2% growth rate in the twelve months through mid-2018.

Consumer price inflation in the euro area slowed to a 17-month low of 1.1% in July from 1.3% in June and 2.2% in July 2018. Core inflation also decelerated by 0.2 percentage points to a 2-month low of 0.9%. Energy prices rose 0.9% on year, down from a 9.5% 12-month increase in July 2018.

The Euroland unemployment rate of 7.5% in June was 0.7 percentage points lower than a year earlier and the lowest such has been in 131 months.

Japanese consumer confidence fell in July by a further 0.9 index points to its weakest level in 63 months. Also from Japan came June news of a 9.3% on-year increase in motor vehicle production, a 0.3% uptick in housing starts from a year earlier, and a 4.2% drop on the same basis in construction orders. Such was the third straight year-on-year decline in construction orders.

The NBS-compiled Chinese manufacturing and non-manufacturing purchasing manager indices printed at a respective 2-month high of 49.7 and 8-month low of 53.7 in July.

South Korean industrial production and retail sales were 2.9% higher and 1.2% lower in June than a year earlier. Both comparisons were the weakest since February.

Business confidence in Singapore slipped to a 2-quarter low in 2Q19. On-year GDP growth of 0.6% in Hong Kong last quarter matched the first quarter’s 10-year low.

Australian consumer prices rose 0.6% on quarter in 2Q, most in a year and a half, but on-year inflation of 1.6% remained under target and just 0.3 percentage points above the 10-quarter low seen in 1Q19. Core inflation neither accelerated nor decelerated in the latest period. Private credit in Australia ticked just o.1% higher in June, a 3-year low, while M3 money surpassed its year-earlier level by 4.0%. In New Zealand business confidence sagged to an 11-month low in July.

British consumer sentiment recovered two index points to a 2-month high of minus 11 in June. British shop prices dipped 0.1% on year in July, the same 12-month change as in June and a switch from May’s 0.8% increase. On-year house price inflation in the U.K., however, weakened to 0.3% according to the Nationwide index, and that constitutes a six-month low.

German retail sales soared 3.5% in June, the largest monthly rise in 150 months, but the 1.6% drop from a year earlier was the weakest year-on-year comparison in nine months. The German jobless rate printed at 5.0% in June for a third straight month, and employment showed a 0.9% increase from a year earlier.

Italy’s 9.7% jobless rate in June was the lowest since January 2012. However, Italy also announced its lowest CPI inflation rate in 17 months. Consumer prices were only 0.5% greater than a year earlier in July. Italian GDP stagnated both on quarter and in year-on-year terms during the second quarter.

French consumer prices dipped 0.2% on month and were 1.1% greater than their July 2018 level.

Spanish GDP last quarter grew 0.5% versus the prior quarter and by 2.3% from a year earlier.

Greek retail sales fell 2.4% on year in May, marking their third on-year drop in four months.

Portuguese CPI inflation of minus 0.3% was negative for the first time since February 2015. PPI inflation in Hungary of 0.1% in June was its lowest in 31 months.

Turkey’s trade deficit collapsed to $14.85 billion in the first half of 2019 from $40.80 billion a year earlier, reflecting depressed domestic demand and a weak currency.

The quarterly sequence of Mexican GDP growth has been zero percent in the final quarter of 2018, a contraction of 0.2% in the first quarter of this year and a mere 0.1% uptick last quarter. As a result, on-year growth of negative 0.7% compared very adversely with +2.6% in the year through the second quarter of 2018.

ADP’s estimate of U.S. private sector jobs growth of 156k in July was very close to street expectations. The U.S. employment cost index posted an on-year increase of 2.7% last quarter, down from 2.8% in the four previous quarters. Still ahead: the Chicago regional manufacturing PMI.

Canadian producer prices were 1.7% lower in June than a year earlier, marking the most deflation in 23 months. Canadian monthly GDP growth compiled from the supply side slowed in May for a second straight month and was just 1.4% above its year-earlier level. Industrial production went up 0.4% on month and 1.7% on year.

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





Tags: , , , ,


Comments are closed.