Dollar Reverses Friday’s Drop on This Monday Labor Day

September 6, 2021

The initial dollar response to a disappointing U.S. August jobs report had been downward, but the U.S. currency advanced in overnight trading by 0.3% against its weighted DXY index, the Swiss franc, sterling and Australian dollar, by 0.2% relative to the Canadian dollar and euro and by 0.1% vis-a-vis the Japanese yen.

U.S. and Canadian markets will be closed for Labor Day holidays. There is a meeting today of EU finance ministers.

Stock markets in the Pacific Rim climbed 1.8% in Japan, 1.1% in China, 1.0% in Hong Kong and 0.6% in Singapore. Stock market gains in Germany, France, Italy and Great Britain so far today are tightly grouped between 0.7% and 0.8%.

Ten-year German bund and Japanese JGB yields have edged a basis point higher.

WTI oil and Comex gold are 0.7% and 0.4% softer.

Aside from the absence of North American financial market activity on this holiday Monday, a minimum of potentially market-moving economic data have been released.

Most notable in the data realm has been the much stronger-than-projected 3.4% jump in German industrial orders during July, which followed an upwardly revised 4.6% increase in June and resulted in a 24.4% advance from a year earlier and a gain of almost 16% compared to the pre-pandemic February 2020 level.

Among today’s purchasing manager surveys reported,

  • Euroland’s construction PMI fell 0.3 points to 49.5 in August, lowest since 45.0 last February. The German and French readings of 44.6 and 44.9 were at 3- and 6-month lows, whereas the Italian construction PMI leaped 9.4 points higher to the best level ever in this 22-year-long data series.
  • The British construction PMI also fell to a six-month low, printing at 55.2 in August versus 58.7 in July and a record high of 66.3 in June.
  • Non-oil PMI readings fell in August to a 5-month low of 54.1 in Saudi Arabia and a 2-month low of 53.8 in the United Arab Emirates but climbed to a 9-month high of 49.8 in Egypt.
  • Economic and political instability in Lebanon depressed its private purchasing managers index to a 5-month low of 46.6 last month.

The Sentix economic sentiment index for Euroland dropped 2.6 index points to a 5-month low in September of 19.6.

Spanish consumer confidence slipped to a 3-month low in August.

Czech industrial production rose for the fourth time in five months, climbing 2.1% in July, but its 7.0% rise from a year earlier was the smallest 12-month increase in five months. On-year growth in Czech imports of 12.5% that month was about three times faster than the rise in exports. The Czech jobless rate  slid to a 15-month low last month.

CPI inflation in Thailand, which had been as high as 3.4% last April, slid marginally below zero percent in August.

New Covid infections in the United States exceeded 160k on each of the past three days ewand were associated with 4,659 deaths over that period. There continues to be great confusion over who is eligible for a booster vaccine, even as an increasing number of people are passing the six-month milestone since their second shot. The Republican-controlled government in Texas has earned the nickname Texas Taliban over its polarizing stands and intimidating tactics on the issues of abortion and public health. Long before these cultural flare-ups in the formative twentieth century years of flexible dollar exchange rates, it was generally bad news for the U.S. currency any time a Texan was responsible for decisions about dollar policy.

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


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