Little Overnight Change in the Dollar

December 10, 2019

The dollar rose 0.3% against sterling and the Australian dollar but shows nil overnight change otherwise.

Stocks were narrowly mixed in the Pacific Rim and are down slightly in Europe. There been little share price movement in the U.S. thus far today.

Ten-year sovereign debt yields firmed three basis points in Great Britain as the election nears, 2 bps in the U.S. as Democrats move closer to a vote to impeach President Trump, and a basis  point in Germany. The 10-year JGB yield dipped a basis point, in contrast.

Gold and oil prices are trading 0.3% and 0.1% higher.

The German ZEW investor expectations index leaped 12.2 points to a 22-month high in December, and perceived current conditions posted a 3-month high. Likewise, the December euro area ZEW indices advanced to their best levels in 21 months on expectations and four months on the measure of current conditions.

British industrial production recovered only 0.1% in October following drops of 0.7% in August and 0.3% in September. A 1.3% on-year slide was the smallest since July. On a more dour note, construction output sank 2.3% on month and 2.1% from a year earlier, which is the largest 12-month decline since December 2018. Also, the U.K. goods and services trade deficit ballooned to a 6-month high of GBP 5.188 billion and embodied a huge merchandise trade deficit of GBP 14.5 billion in the latest reported month. Monthly British GDP was unchanged in September.

French industrial production rose 0.4% in October just as such had in September, but its 12-month rate of change swung into the red by 0.2%. Italian industrial production in October fell 0.3% on  month and recorded an eighth straight year-on-year decline, this time of 2.4% which is the largest drop in the streak.

Chinese consumer prices rose 0.4% in November, the smallest monthly increase since July, but the 12-month inflation rate of 4.5% was up from October’s 3.8% pace and the most in 94 months. A 1.4% on-year decline of producer prices was the smallest decline since August.

Chinese bank lending in November increased to a 2-month high of CNY 1.39 trillion, but on-year growth of 8.2% in M2 money was a tad slower than in September-October and below analyst expectations.

Japanese M2+CDs aggregate of money posted on-year growth of 2.8% in November, up from 2.4% in both October and the first nine months of this year but down from 2.9% in 2018 and 4.0% in 2017. Japanese machine tool orders recorded their largest 12-month rate of decrease in November (37.9%) since a similarly-sized drop between June 2018 and June 2019.

On-year growth in Indonesian retail sales of 3.6% in October was the most since May. Sales were also 1.6% higher than the level in September.

Australian home prices posted their biggest quarter-on-quarter rise in 3Q19 since 4Q16, a gain of 2.4%. This halved the on-year drop in home prices to 3.7%. According to monthly measures compiled by the National Australia Bank, business confidence dipped back to September’s zero level in November from +2 in October, while business conditions last month remained at October’s four-month high of +4.

Several European countries reported price data today. Norway’s CPI inflation rate eased 0.2 percentage points to a 2-month  low of 1.6%, with core CPI falling to a 13-month low of 2.0%. Norwegian PPI deflation had touched a 41-month high  of 13.8% in October, but the 12-month slide in producer prices moved in to 9.5% last month. CPI inflation  in Hungary rose 0.5 percentage points to a 5-month high last month of 3.4%, and the Czech 3.1% CPI inflation rate then was the most since October of 2012.  Greek CPI inflation, though only 0.2% in November, represented a 5-month high, and Danish CPI inflation of 0.7% was at a 6-month high.

In released U.S. economic data today, non-farm labor productivity was revised to a contraction of 0.2% last quarter and a 3-quarter on-year low of +1.5%. Unit labor costs shot up 2.5% on quarter and accelerated to a 2.2% on-year increase. Separately, the NFIB monthly estimate of small business sentiment jumped 2.3 index points to a reading in November of 104.7. This matches the second best score this year, which was touched in July. The highest reading (105.0) occurred in May, and the lowest (101.3) happened back in January. More  importantly, the size of the month-to-month improvement in November was the most since May of 2018.

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

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