Dollar and U.S. Equity Futures Down Marginally from Elevated Closing Levels on Monday

April 6, 2021

The dollar settled back 0.15% on a weighted index despite gains overnight against the Australian, Canadian and New Zealand dollars, the Turkish lira and pound sterling.

After reaching record highs on Monday, U.S. S&P and DJIA futures have edged down 0.2% and 0.1%. Stock markets in the Pacific Rim fell 1.3% in Japan and 0.9% in New Zealand. In Australia where the Reserve Bank of Australia’s Board conceded that the growth outlook had improved by maintained forward guidance that an interest rate hike before 2024 is unlikely, equities advanced 0.8%. And in Europe, where markets reopened after the extended Good Friday/Easter holiday closure, share prices so far have risen 1.2% in the U.K. and Germany, 1.0% in Spain, 0.9% in Switzerland, and 0.6% in France and Italy.

WTI oil has trimmed yesterday’s 4% plunge by half. The price of gold is 0.4% firmer.

The ten-year British gilt yield rose two basis points today, while its U.S., German and Japanese counterparts have each shed a basis point.

Japanese household spending fell 6.6% year-on-year in February. The was the third consecutive 12-month decline and a bigger drop than analysts were predicting. On a brighter note, Japanese labor cash earnings posted only a 0.2%  decline from a year earlier in February, which was the smallest drop in an 11-month streak of decreases.

An 11.5% on-year advance in British new car sales last month was the first increase since last August. Sales had dropped 29.4% in 2020 and by slightly more than 35% on year in the first two months of 2021.

Euroland’s unemployment remained steady in February at January’s 8.3% level and a full percentage point above the February 2020 level.

Spanish consumer confidence improved for a second straight month to a one-year high reading of 73 in March. Such printed at 56.7 in January.

Mexican consumer confidence also climbed to a 1-year high in March.

Purchasing manager survey results reported today were generally upbeat. For example, China‘s Caixin-compiled composite and service sector purchasing manager indices each rose in March to 3-month highs of 53.1 and 54.3.

Singapore‘s private sector PMI slipped 1.4 points to a 2-month low of 53.5 last month.

The Swedish composite and service sector PMI readings in March were at 2-month lows yet still robust overall at 62.0 and 61.3.

Denmark’s manufacturing PMI spiked sharply above 50 in March to a 29-month high of 65.4.

Norway‘s manufacturing purchasing managers index climbed 2.9 points in March to a 44-month high of 60.4.

CPI inflation in the Philippines dipped 0.2 percentage points in March to 4.5% from a 26-month high reached in February.

Australia’s Official Cash Rate had been cut three times last year, twice in March by a total of 75 basis points and most recently by a further 15 bps in November to a record low of 0.10%. That level was retained at today’s monthly policy review by the Reserve Bank of Australia Board. So were the 3-year sovereign debt yield target of 0.10% and the central bank’s quantitative policy settings. A released statement observes improved growth prospects but also persistent uncertainties and subdued wage and price pressures. Forward policy guidance remains extremely accommodative:

 The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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