Narrowly Mixed Dollar… Tuesday Data Menu Features GDP

June 8, 2021

The dollar slipped overnight by 0.4% against the Mexican peso, 0.3% relative to the Turkish lira and 0.2% versus the Swiss franc but rose but 0.2% versus the kiwi and sterling and 0.1% relative to the euro, yen, and Australian dollar. There’s been no net change in the Chinese yuan or Canadian dollar.

Ten-year sovereign debt yields dropped three basis points in the United States and U.K. and by two bps in Germany.

Share prices fell 1.2% in Indonesia. Movements in other stock exchanges have been generally modest.

Among commodities, the price of WTI oil fell 0.8% overnight, while that of gold firmed 0.2%.

The legislative prospects of President Biden’s ambitious agenda have dimmed considerably.

Revised Japanese GDP figures for the first quarter revealed a 1.0% quarterly drop (-3.9% at an annualized rate) compared to a previously estimated decline of 1.3%. Real GDP was 1.6% below its year-earlier level. The GDP price deflator fell 0.3% on quarter and 0.1% on year. GDP in the quarter got positive contributions from inventories and residential investment but was depressed by declines in personal consumption, government spending, non-residential business spending and net foreign demand.

Revised 1Q GDP data were also released for several European economies. The estimated contraction of euro area GDP last quarter has been halved to 0.3%, and that trimmed negative year-on-year growth to 1.3% from a drop of 1.8% measured earlier. Within Euroland, GDP slumped by 1.8% on quarter in Germany, 3.3% in Portugal, 1.1% in Austria, 0.5% in Spain and the Netherlands, and 0.1% in Finland and France but rose 0.1% in Italy, 1.0% in Belgium, and 2.0% in Cyprus. Employment in the euro area fell for the first time in three quarters. The decline was 0.3% and left its year-on-year drop unchanged at 1.8%.

In Eastern Europe, GDP rose on quarter in Poland, Romania and Hungary but fell 0.3% in the Czech Republic. In Nordic Europe, GDP increased last quarter in both Sweden and Norway but fell in Denmark.

South African real GDP expanded 4.6% at an annualized rate between 4Q 2020 and 1Q 2021, and its year-on-year decline, which had swelled to 17.8% in the second quarter of 2020, narrowed thereafter to 4.2% by 4Q and 3.2% last quarter.

Small business sentiment in the United States edged back to a 2-month low of 99.6 in May reflecting frustrations finding new workers. This broke a streak of three straight increases.

The U.S. goods and services trade deficit printed at $68.889 billion  in April, 8.2% narrower than March’s record high. The January – April deficit of $281.7 billion was $94.5 billion wider than in the first third of 2020.

Japan’s current account surplus of JPY 1.322 trillion in April was much larger than that of JPY 207 billion in pandemic-afflicted April 2020, and in seasonally adjusted terms, the surplus of JPY 1.553 billion was also 7.4% smaller than in March.

Among other Japanese data releases today, the economy watchers index fell a full point to a 4-month low, and the forward-looking E-watchers outlook measure collapsed 8.1 points to 41.7 in May. On-year growth in Japanese bank lending slowed appreciably to 2.9% last month from 4.8% in April and 6.2% in 1Q 2020. But on-year growth in labor cash earnings remained in positive territory for a second straight month and at a 29-month high of 1.6%.

The NAB-compiled Australian indices of business confidence and business conditions respectively printed in May at a 2-month low of 20 and a record high of 37.

Taiwanese CPI and WPI inflation accelerated in May to an 99-month high of 2.5% and a 154-month peak of 11.3%.

German industrial production suffered a setback in April. A monthly drop of 1.1% marked the third decline within the first four months of 20201 and left output 5.6% below its pre-pandemic peak, but compared to the highly depressed level in April 2020, production was 26.4% higher.

The ZEW measure of investor sentiment toward Germany fell back to a 2-month low in June after May’s 21-year high, and perceived current conditions were the best in 22 months. For all of Euroland, the ZEW expectations index also dipped to a 2-month low, whereas the current situation index was considerably less negative at -24.4 in June after -51.4 in May.

Italian retail sales slid 0.4% in April but posted the largest on-year advance (30.4%) in 37 years.

Brazilian retail sales increased 1.8% in April, most in eight months, and 23.8% versus a year earlier.

British same store sales in June were 18.5% greater than a year  earlier. That was a smaller advance than in April or May.

The Canadian trade balance swung to a surplus of C$ 594 million in April from deficits of  C$ 1.347 billion in March and C$ 5.447 billion in April 2020. Supply chain delays affecting the North American automotive sector was primarily responsible for the unexpected surplus.

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

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