Somewhat Weaker Dollar
April 8, 2021
The dollar is trading 0.2% lower against its DXY weighted index and versus the loonie, Swiss franc, sterling, Turkish lira and Mexican peso. Larger drops include losses of 0.6% versus the yen, 0.5% against the kiwi and yuan, and 0.4% vis-a-vis the New Zelanad dollar. No net change against the euro limited the weighted dollar’s movement.
Released FOMC minutes yesterday afternoon shed little fresh light on the thinking of Fed officials. Labor market trends will feature prominently in guiding future policy. The rate of labor market improvement is less important than how much ground needs to be covered to restore pre-pandemic conditions.
Seemingly on cue, today’s U.S. weekly report on jobless insurance claims exceeded expectations, as new claims rose for a second straight time to a 3-week high of 744k, which was more than 60 thousand greater than forecast and enough to lift the 4-week moving average as well.
In other central banking news, key interest rates were left unchanged in Poland and Sri Lanka following scheduled reviews. The National Bank of Poland‘s reference rate has been 0.10% since 140 basis points of easing implemented in March-May 2020. At the Central Bank of Sri Lanka, the standing deposit and standing lending rates were left at 4.5% and 5.5%, respectively. The deposit rate was cut in five increments over the first seven months of last year by a total of 250 basis points. Officials at both central banks remain mindful that the Covid-19 pandemic isn’t over and could yet depress economic conditions anew. They await proof of sustained recovery cycles.
Share prices advanced 1.4% in New Zealand, 1.0% in Australia, 0.9% in South Korea and Taiwan, and 1.2% in Hong Kong but closed with minimal net change in China and Japan. Stock markets are firmer in France and the U.K. but not Germany. DOW futures are flat, but the S&P and Nasdaq futures point to a higher open.
The prices of WTI oil and Comex gold are respectively about 0.5% softer and 0.5% firmer. No noteworthy sovereign debt yield movements to report.
Turning to data released today,
Japan’s current account surplus of JPY 2.917 trillion in February was a tad smaller than the year-earlier surplus of JPY 3.061 trillion. Consumer confidence in Japan improved 2.4 index points in March but remained very weak historically and, at 33.9, was still weaker than the February 2020 reading of 38.4. Last April saw the trough of 21.3. Finally, Japan’s economy watcher’s index rose 7.7 points to a 5-month high in March of 49.
Euroland producer price inflation accelerated 1.1 percentage points to a 27-month high of 1.5% in February. There was a 0.5% month-on-month advance after January 1.7% leap, which had been the biggest such gain in roughly fifteen years. House price inflation accelerated to 5.4% in the final quarter of 2020.
Euroland’s construction purchasing managers index improved 5.1 index points to a 13-month high of 50.1 in March, marking the first time in over a year that construction conditions expanded. Despite 7-month and 9-month highs in the German and French construction PMI scores, both readings were still below the key breakeven threshold of 50.
The British construction purchasing managers index jumped 8.4 index points to a 78-month high of 61.7 in March. And the Royal Institute of Chartered Surveyors reported a rise in its monthly house price balance index to 59% in March from 54% in February and 49% in January.
German industrial orders posted their third monthly increase in four months. The advance of 1.2% in February was associated with a 5.6% increase compared to the year-earlier level.
Swedish industrial production advanced 1.0% on month and 2.4% on year in February.
Irish industrial production jumped 4.3% on month and 40.3% on year in February.
Dutch consumer price inflation accelerated 0.1 percentage point to a 15-month high of 1.9% last month.
Hong Kong’s private-sector purchasing managers index printed 0.3 points higher in March at a 3-year peak of 50.5, still signalling minimal positive growth.
Taiwanese CPI inflation settled back slightly to 1.26% last month. Such has been slightly negative as recently as January. Wholesale price inflation swung to 4.36% from -4.8% as recently as December. March saw the first outcome above zero percent since October 2018.
Factory output in South Africa declined 1.2% on month and 2.1% on year in February. The 12-month change has been negative in all but a single month since June 2020.
Business confidence in New Zealand has deteriorated further this month according to the ANZ index, printing at -8.4 versus -4.1 in March and +9.4 as recently as January.
Covid concerns also depressed Thai consumer confidence, which fell back to a two-month low in March of 48.5. And in the Philippines, factory output in February was 46.5% below its year-earlier level. On-year changes have been negative since February 2020, and the latest decline was the largest since September.
Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Sri Lanka, Euroland producer prices, FOMC Minutes, German industrial orders, Japanese current account, National Bank of Poland
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