Dollar and European Equities Slip

August 13, 2020

The dollar slid overnight by 0.6% against sterling, 0.4% versus the euro, 0.3% relative to the loonie, and 0.1% against the Swiss franc.

Equities closed higher by 1.8% in Japan, 1.3% in Singapore and 0.7% in Taiwan, but trading in Europe has seen losses so far today of 1.1% in the U.K., 0.3% in Germany and Italy and 0.2% in Spain and France.

The 10-year German bund yield ticked up a basis point, while the 10-year JGB yield edged down a basis point.

Overnight movements in oil and gold prices have been inconsequential. OPEC predicts a drop in oil demand this year.

As investors await the release of U.S. import price data and weekly jobless insurance claims, other price data reported this morning show

  • A second straight monthly 0.6% rise in Japan’s PPI, trimming its 12-month decline to 0.9% in July from 2.8% two months earlier. Japanese import prices jumped 1.9% on month but were 12.6% lower than a year earlier.
  • Final German CPI figures for July confirm a 0.5% monthly decline and the first on-year drop (0.1%) in 51 months.
  • German wholesale prices, by contrast, rose 0.5% in July, resulting in the smallest on-year decline (2.6%) since April. The oil product component posted a 17.9% on year drop after a decrease of 23.4% in the year to June.
  • Spanish consumer prices fell 0.9% on month in July and were 0.6% lower than a year earlier.
  • Czech consumer prices climbed 0.4% on month, lifting the on-year comparison by 0.1 percentage point to a 4-month high of 3.4%.
  • New Zealand food price inflation rose 0.1 percentage point to 4.2% in July.

The National Bank of Serbia’s policy interest rate, which had been cut 50 basis points in March and by a further 25 bps in both April and June, was left at the record low of 1.25%. A statement from the Executive Board struck a guardedly upbeat tone, observing a rise in the latest CPI inflation observation and indicating that policy stimulus is apt to result in GDP not declining as much as thought earlier.

Australian monthly labor market statistics revealed a lower-than-forecast 7.5% unemployment rate in July, an upturn in full-time workers for the first time since the pandemic, and a second straight rise in total jobs and the labor participation rate.

Norwegian consumer confidence in the third quarter printed at a 9-quarter low of -6.6, down 3.2 index points from the second-quarter level.

The British Royal Institute of Chartered Surveyors monthly U.K. house price balance index unexpectedly soared 25 index points to +12 last month, having bottomed at -32 in May.

Chinese foreign direct investment was 15.8% higher in July than a year earlier. This enabled the year to date on-year change to finally cross into positive territory. In January-July, such was 0.5% greater than a year earlier after posting a 14.1% plunge in the first quarter.

South African mining production fell 1.4% on month and 28.2% on year in June.

President Trump accused House Democrats of failing to negotiate with Senate Republicans on a fiscal stimulus. Analyses of the presidents executive orders in that regard have been universally negative.

Just in: After exceeding 1 million in twenty consecutive weeks, the number of new U.S. jobless insurance claims was 963,000 last week. Continuing jobless insurance claims in the prior week to August 8 dropped by 604 thousand to 15.5 million. Separately, U.S. on-year import price deflation in July of 3.3% was the least negative in 5 months. The cost of imported fuels jumped 6.9% on month, while all other import costs rose only 0.2% on month.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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