Dollar Unchanged Overnight but Down Slightly for the Week

October 15, 2021

The DXY weighted dollar index is 0.2% softer than a week ago, setting the stage for its first weekly decline in six weeks. Overnight movements have been diverse, with a 0.6% slide against sterling but a 0.6% rise against the yen, touched a multiyear high of 114.4 earlier today. The dollar slipped 0.3% against the kiwi, 0.2% versus the loonie and 0.1% relative to the Australian dollar and euro, but it’s recent rise against the Turkish lira was extended by 0.3%. At today’s record high of 9.2426 Turkish lire per dollar, the U.S. currency was up 4% since the end of September. Ahead of next week’s review of Turkish monetary policy, the country’s president has replaced several members of the Central Bank of Turkey’s policy board in hopes of achieving a more accommodative stance. He was angered when the central bank was raised by two percentage points to 19% last March and is not satisfied with the mere one percentage point drop at September’s central bank meeting to 18%. Turkish inflation of 19.25% is still cresting.

Equities around the world were well bid Thursday and have extended their gains for the most part, with rises today of 1.8% in Japan, 1.5% in Hong Kong, 2.4% in Taiwan, and 0.9% in South Korea. European share prices show gains of around 0.3%, and U.S. stock futures are up, too. Investor expectations for corporate profits last quarter have been exceeded in many cases.

Ten-year sovereign debt yields today are up three basis points in the United States, U.K., and Italy, two bp in France, and a single bp in Germany. The price of WTI oil has risen today by 0.9%, while that of gold is down 0.9%.

The euro area trade surplus of EUR 4.18 billion in August was the smallest surplus in 16 months. On a seasonally adjusted basis, the surplus narrowed to EUR 11.1 billion from EUR 13.5 billion in July. Those sizes are well down from the monthly average of EUR 23.1 billion in the first quarter of 2021. Sharply higher fuel imports which were 84.4% greater in August 2021 than August 2020 have been a major force behind the smaller trade surplus.

Japan’s tertiary index of service sector activity posted its largest month-to-month drop (1.7%) in 13 months during August to go along with the 3.6% plunge reported earlier in industrial production. On-year growth in the tertiary index, which crested at 10.1% in May, was negative 0.5% in August.

Revised consumer price data for September released today put Italian inflation at a 106-month high of 2.5%, and French CPI inflation at a 35-month high of 2.2%.

Sri Lankan PPI inflation rebounded to a 2-month high of 9.4% in August after falling to 8.8% in July from 10.3% in June.

Danish producer price inflation increased a full percentage point to 3.2% in August, most since 2012, and Polish CPI inflation rose another 0.4 percentage points in September to a 243-month high of 5.9%.

A 1.0% monthly advance in Canadian producer prices after August’s 0.3% dip resulted in a 2-month high in year-on-year PPI inflation of 15.0%. Such peaked at 17.3% back in May.

Car sales in the European Union have been stymied by supply shortages. September sales were 23.1% below their year earlier level in contrast to a 6.6% on-year advance for January-September as a whole.

U.S. retail sales outperformed expectations last month, rising 0.7% on month and 13.9% on year. Nonetheless, those results were softer than August figures, and sales in the third quarter as a whole fell 0.7% versus the level in the second quarter.

U.S. import price inflation in September was not quite as high as predicted but still disturbing. A 0.4% month-on-month increase lifted the 12-month rate of rise back to a 2-month high of 9.2%, which compares starkly against a year-on-year drop recorded in September 2020. Export prices went up just 0.1% last month versus expectations of a 0.5-0.6% advance but were 16.3% greater than a a year earlier.

The Empire State manufacturing index, a regional gauge of factory activity in the New York area continued a see-saw pattern this month, printing at a 2-month low of 19.8 after readings of 34.3 in September, 18.3 in August, 43.0 in July and 17.4 in June.

Still Ahead: the Reuters/U. Michigan measure of U.S. consumer sentiment.

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

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