Dollar Strengthens on Day after Big Drop in Stocks

September 29, 2021

The DXY weighted dollar index rose 0.2% to an 11-month high overnight.

Equities in the Pacific Rim picked up the baton from North America’s losing session the day before, dropping 2.1% in Japan, 1.8% in China, 1.9% in Taiwan, 1.2% in South Korea and 1.1% in Australia. However, European markets have mustered rebounds so far of 1.1% in France, 1.0% in Germany and 09.8% in the U.K., Italy and Spain. U.S. stock futures point to a rise of about 0.5% at the open.

Ten-year sovereign debt yields are down three basis points in the U.S., two bps in Germany and the U.K., and a basis point in Japan. Prices for WTI oil (-0.6%) and gold (0.2%) are also lower.

The Bank of Thailand’s policy interest rate has been left at a record low of 0.5% as expected. It’s been at that level since a trio of 25-basis point cuts in Feb-May 2020. The decision was made unanimously, and a released statement “continued to put emphasis on supporting the economic recovery” amid stably low inflation and “high uncertainties surrounding the economic outlook.”

Released data this Wednesday especially feature sentiment indices and measures of inflation.

Euroland’s economic sentiment index for September edged up 0.2 points to a 2-month high. Industrial confidence and consumer confidence rose to 2- and 3-month highs, while sentiment in the services and retail sectors fell to 4-month lows.

Portuguese business confidence fell to a 3-month low in September, but consumer sentiment touched a 19-month high.

Greek business confidence fell to a 3-month low this month. Danish business confidence stayed at the 4-month low touched in August. Finnish business confidence fell to a 2-month low.

Austrian business and consumer sentiment in September each dropped to 5-month lows.

Swedish consumer confidence slid to a 2-month low, while business sentiment rose to a 2-month high.

The Swiss ZEW expectations index rallied in September to a two-month high reading of 25.7 in September after abruptly plunging to -7.8 in August but still remained well south of July’s 5-month low score of 42.8.

Economic sentiment in Turkey improved to a 41-month high in September.

A 0.5% monthly rise in Italian producer prices in August lifted the 12-month rate of increase to a record 11.6% from 11.2% in July. The year began with negative 0.3% on-year inflation in January.

German import prices jumped 1.4% in August, resulting in the largest on-year advance (16.5%) since September 1981. Imported energy cost almost twice as much as a year earlier.

Spanish consumer price inflation rose 0.7 percentage points further in September to a 13-year high of 4.0%, but core CPI inflation was considerably lower at 1.0%.

Belgian CPI inflation of 2.9% this month represents a 55-month high.

British shop prices were 0.5% lower in August than in the same month a year earlier. That was the smallest year-on-year drop so far this year.

Producer prices fell 0.7% last month in Singapore, and their 12-month rate of increase settled back 0.1 percentage point to 17.0%. On-year PPI inflation has been in a 16.8-18.0% range for five straight months but was negative 0.7% as recently as February.

Vietnamese CPI inflation slowed to a half-year low of 2.16% in September.

Canadian producer prices fell 0.3% in August, and the 12-month rate of increase slowed by 1.1 percentage points to a 5-month low of 14.3%.

British mortgage approvals receded further to a 13-month low of 74.5 thousand in August but remain fairly robust by historical standards.

The ruling LDP leadership vote in Japan was won by Fumio Kishida, who will consequently become Japan’s next prime minister.

U.S. pending home sales data will be released shortly.

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


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