Wednesday Brings Mix of Data and Market Movements

August 21, 2019

Compared to closing dollar levels on Tuesday, the greenback has declined 0.4% against the loonie and peso and by 0.3% relative to the Australian dollar. Alternatively, the U.S. dollar is up 0.3% against the Swiss franc, 0.2% versus the yen and sterling and 0.1% against the yuan. Once more the euro shows no net change against the dollar. Neither does the kiwi.

Whereas equities fell mostly in the Pacific Rim, markets advanced in Europe, and a rise is also indicated likely in the United States (the DOW improved 1.0% in the first quarter hour of trading).

10-year sovereign debt yields rose overnight by 3 basis points in the Netherlands and U.S. futures, 2 bps in France Germany and the U.K., but such dropped 5 basis points in Italy.

Among commodities, Comex gold slipped 0.3%, while the price of  WTI oil rose 1.1%.

More data were consistent with the theme of slower growth and inflation.

  • On-year declines of 7.1% and 2.9% in Japanese supermarket and department store sales during July were greater than in any month of the first half of 2019.
  • Dutch consumer confidence fell 2 index points to a 2-month low of zero in August.
  • In Belgium, consumer sentiment fell 3 points to -9, weakest in at least a year.
  • South Korean producer price inflation of minus 0.3% in July was at a 35-month low.
  • Polish PPI inflation in July stayed at June’s 18-month low of 0.6%, and there was a 0.5% monthly slide.
  • South African CPI inflation decelerated a half percentage point in July to a 6-month low of 4.0%. Core inflation also eased.
  • Norwegian unemployment of 3.6% in May-July was at a 4-month high.
  • Mexican retail sales dropped 0.5% on month in June and recorded the smallest 12-month increase (just 1.0%) since January. Wholesale turnover also was weak, rising just 0.2% on month and dropping 4.8% below its year-earlier level.
  • Swiss M3 money growth decelerated a half percentage point to 3.1% in July.
  • The reason why Spain’s EUR 1.53 billion trade deficit in June was 37.5% smaller than a year earlier was a 2.6% drop in imports. Exports grew just 0.9% year-on-year.
  • Australia’s Westpac MI index of leading economic indicators, which had posted three straight monthly dips of 0.1%, rebounded just 0.1% in July.
  • The French index of leading economic indicators fell 0.4% in June and was accompanied by a mere 0.1% uptick in the index of coincident indicators that month.
  • Public sector net borrowing in Great Britain showed a surplus in July of GBP 1.971 billion, less than half of its size a year earlier, and the four-month deficit in April-July of this fiscal year was 16% greater than a year earlier.

Canadian consumer price data surprised on the upside, however. Instead of decelerating 0.3 percentage points as forecast, inflation stayed level at June’s on-target 2.0%. Various measures of core inflation either were unchanged too or edged marginally lower. These data may persuade Bank of Canada officials not to be hasty in easing policy again.

Polish industrial production for July was also reassuring, recording a 2.8% monthly rebound and a 5.8% advance from a year earlier.

Donald Trump wants to buy Greenland, which has been Danish since 1814. Danish government officials rejected the request, so the U.S. president as is his wont canceled a planned trip to Denmark.

Still ahead: FOMC minutes will be published, and U.S. existing home sales get reported.

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


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