Softer Dollar/Stronger Equities

October 19, 2021

The dollar fell against most currencies overnight including drops of 0.4% against the euro and weighted DXY index. The dollar also lost 0.7% relative to sterling and 0.8% versus the Aussie dollar but just 0.2% against the Japanese yen. The 10-year Treasury yield is a basis point lower, while its German and Japanese counterparts are slightly up.

Equities rose 1.5% in Hong Kong and 0.7% in Japan, New Zealand and China. European stock markets have hardly moved, but U.S. futures signal a higher open. Oil is trading near the best levels since 2014. Gold rose overnight, too.

Construction output in the euro area sank 1.3% on month in August and resulted in the first on-year decline (1.6%) in 17 months.

The Swiss trade surplus widened from CHF 25.3 billion in January-September 2020 to CHF 36.3 billion in the first nine months of this year.

Spain’s trade deficit in the first eight months of 2021 of EUR 10.87 billion was about 11% wider than a year earlier.

Bank Indonesia’s 7-day reverse repo rate was left unchanged at a record low of 3.5%, its level since a 25-basis point cut in February. There were five 25-bp reductions during 2020.

Minutes from the Reserve Bank of Australia policy meeting earlier this month said that less accommodation would temper house price inflation but at the cuts of slower growth in jobs and wages. And officials are not going to make that bargain. The first rate hike isn’t likely before 2024.

Portuguese PPI inflation of 13.3% in September  is the most since 2000.

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

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