Somewhat Firmer Dollar and Share Prices Holding onto Monday’s Recovery

June 22, 2021

The dollar firmed overnight by 0.2% against its weighted DXY index, the yen, euro, Swiss franc and loonie. The dollar also advanced 0.3% against the Australian dollar and sterling, 0.4% versus the Mexican peso, and 0.1% vis-a-vis the kiwi and yuan. The dollar fell back 0.9% against the Turkish lira from a record high.

Last week’s notable slide in equities around the world was trimmed yesterday, and a better tone continues as investors await Fed Chairman Powell’s testimony today before a House subcommittee looking into the impact of the Covid pandemic. Japan’s Nikkei closed up 3.1%, and markets advanced 1.5% in Indonesia and Australia. Gains in Europe and U.S. futures have been modest by comparison.

Ten-year U.S. Treasury and British gilt yields have dipped a basis point, while the German bund yield is holding steady.

Bitcoin troubles continue. The flagship cryptocurrency has dropped over 8% this week and is hovering around $31,400. The price of West Intermediate crude oil is down 0.7% but above $73.0 per barrel. Gold edged 0.2% higher but remains below $1800 per ounce.

On the data front, consumer sentiment in June touched a 2-year high in Ireland, a six-quarter high in New Zealand,  a 15-month high in the Netherlands and a 3-month high in Turkey but settled back to a 2-month low in Denmark. Taiwanese consumer confidence in May slid to a 3-month low.

The monthly industrial trends survey of the Confederation of British Industries shows orders rising two additional index points in June to a 397-month high. British public-sector net borrowing in May of GBP 24.3 billion was down considerably from GBP 43.7 billion a year earlier.

Irish wholesale prices fell 1.5% on month and 7.6% on year in May.

South Korean producer prices rose 0.4% on month and 6.4% (a 116-month high) on year.

Sri Lankan PPI inflation of 9.8% in April was the most in just over three years and up from 8.1% in March and 4.5% in January.

CPI inflation in Hong Kong accelerated 0.2 percentage points to a 4-month high in May of 1.0%. Hong Kong’s current account swung from a HKD 10.3 billion deficit in the first quarter of 2020 to a HKD 59.5 billion surplus in 1Q 2021.

Italian industrial sales jumped 3.3% on month in April and posted the largest-ever year-on-year advance of 105.1%. Dutch household consumption‘s 12-month 9.4% rate of increase in April was also the most ever and also the first year-on-year increase since the pre-pandemic month of February 2020.

Switzerland’s current account returned to surplus in the first quarter (15.93 billion) after recording a rare deficit in the final quarter of 2020.

The Swedish and Finnish jobless rates in May of 9.8% and 9.6% represent 2- and 12-month highs, respectively.

Officials later today will be announcing their latest decision on the policy interest rate at the National Bank of Hungary. It’s been at 0.60% since last July.

The U.S. data menu today includes existing home sales, the Richmond Fed manufacturing index, and the index of leading economic indicators, but the main attraction of the day will be Fed Chairman Jay Powell’s congressional testimony.

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


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