Dollar and Stock Markets Up

November 12, 2019

The dollar traded up overnight by 0.4% against the kiwi, 0.3% relative to the Swiss franc, 0.2% vis-a-vs the euro, loonie and sterling, and 0.1% against the Australian dollars.

Stock markets in the Pacific Rim advanced by 0.8% in Japan, South Korea, Taiwan and Singapore and by 0.5% in Hong Kong and Indonesia. India is closed for Guru Nanak Jayanti. In Europe, share prices so far have firmed 0.6% in Germany, 0.4% in the U.K., 0.3% in Spain and 0.2% in France.

The yield on ten-year Japanese JGBs, climbed four basis points and those on comparable German bunds and British gilts edged a basis point higher. In U.S. treasury futures trading, the 10 year remains steady at 1.94%.

WTI oil is 0.4% higher, while the price of gold drifted 0.2% lower.

According to the monthly check by the German ZEW Institute, investors became much more hopeful in November, perceiving a diminishing chance of a no-deal Brexit and also progress in the U.S.-Sino trade talks. Expectations regarding Germany leaped from -22.8 in October to a 6-month high of -2.1 in November. Views about current conditions in Germany’s economy recovered to a 2-month high of -24.7 from a reading of -25.3 the month before. As for the whole euro area, the ZEW expectations index jumped 22.5 points to a 7-month high of -2.1, and the current situation score rose 6.8 points to a 2-month high of -19.6.

Civil disorder in Hong Kong continues to mount and, according to police there, is close to the breaking point.

Retail sales in Singapore remained below year-earlier levels in September, having been such since February. The latest 12-month rate of decrease was 2.2%.

Speaking of year-on-year declines, Japanese machine tool orders posted a huge 37.4% drop in October, the biggest such slide since June. Japanese on-year M2 money growth of 2.5% in October was in line with earlier 2019 results showing on-year increases of 2.3% in the first quarter, 2.5% in 2Q and 2.4% in 3Q.

Australian business confidence and business conditions according to the monthly checks by National Australia Bank improved in October to 3-month highs.

European data releases today are topped by British labor statistics. Average weekly earnings slowed in the third quarter to 3.6%. Jobless insurance claims posted another significant increase in October, and the associated jobless rate edged 0.1 percentage point higher. ILO-basis jobs fell by a smaller-than-expected 58k last quarter, however.

ECB Governing Council member Mersch express concern that manufacturing weakness could spread to the broader service sector economy and urged Euroland governments to provide more fiscal stimulus.

The Bank of France’s manufacturing and service sector confidence measures respectively rose and fell in October, while the measure for construction remained steady. Officials at that central bank expect French GDP growth to slow this quarter to 0.2%.

Romanian CPI inflation last month of 3.4% was at a 10-month low.

Trump delivers a speech today on trade and other economic policies of his administration. Public impeachment hearings begin tomorrow in the House of Representatives Intelligence Committee.

U.S. small business sentiment rose 0.6 index points to a 2-month high in October of 102.4 according to the NFIB measure. That’s still the second lowest reading since March.

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

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