On Labor Day 2022, the Dollar Hits Fresh 20-Year High on DXY Weighted Index
September 5, 2022
U.S. and Canadian markets are closed for Labor Day observances.
Former British Foreign Secretary Liz Truss has won the Conservative Party leadership vote and will succeed Boris Johnson as prime minister. She becomes the country’s third woman to hold that office, following Margaret Thatcher and Theresa May. Truss campaigned on an orthodox conservative agenda and plans to cut corporate taxes.
The weighted DXY dollar index overnight high of 110.27, its strongest level since 2002 and is up 0.3% on balance. The dollar also has recorded 0.3% advances against the euro and yen and is up 0.5% against the yuan and near a 2-year low.
Continental European stock markets are down sharply so far today, including 2.1% in Germany, 1.9% in Italy, and 1.2% in France. But the British FTSE is unchanged, and Japan’s Nikkei closed just 0.1% lower.
Ten-year sovereign debt yields extended uptrends today by 10 basis points in Italy, 7 bps in Switzerland, 6 bps in Spain, and four basis points in France and Germany.
Oil ministers of OPEC Plus have a agreed to a comparatively small 100,000 barrel per day production cut. The price of West Texas Intermediate is up 3.3% but still below $90 per barrel.
Prices for Bitcoin and gold are respectively down 1.3% (and back below $20,000) and unchnaged.
Turkish consumer price inflation broke above 80% to a 287-month high of 80.2% in August versus 19.25% in the year-earlier month. Producer price inflation eased from a record high in July of 184.6% to a 2-month low in August of 143.75%.
Australian retail sales rose 1.3% on month in July, most since a 1.6% increase in March and following a 0.2% uptick in June.
Retail sales volume in the euro area rose 0.3% in July, marginally less than forecast and associated with a 0.9% year-on-year decline. Sales fell 1.8% in Austria, 1.0% in Spain, and 0.9% in France but rose on month by 1.9% in Germany.
Swiss real GDP grew more slowly in 2Q (0.3%) than in the first quarter of this year and recorded a 5-quarter low year-on-year growth rate of 2.8%.
Mexican consumer sentiment weakened in August to a 17-month low, and service sector purchasing manager surveys from various other countries also highlighted the toll that very elevated inflation is having on aggregate demand.
For example, Euroland’s services purchasing managers index was revised to a sub-50 reading and 17-month low of 49.8 in August from 50.2 estimated earlier. It was down from readings of 51.2 in July and 57.7 in April, and in conjunction with a 26-month low manufacturing PMI score of 49.6 contributed to an 18-month low composite PMI last month of 48.9. These results suggest that GDP is likely to drop slightly in the third quarter and indicate that economic weakness is broadening as well as deepening. Germany’s composite PMI fell to a 27-month low of 46.9, and the best composite reading among reporting Euroland members was only 51.0 for Ireland.
Japan’s composite PMI dropped beneath the 50 neutral level to 49.4, its first sub-50 score since February and associated with a services sector PMI reading of 49.4.
China’s composite and services PMI readings of 53.0 and 55.0 were at 3- and 2-month lows.
Britain‘s composite and services PMIs printed at 18-month lows in August of 49.6 and 50.9.
Russia‘s composite and services PMIs were at 50.4 (a 2-month low) and 49.9 (a 3-month low).
Singapore‘s private purchasing managers index, 50.1, matched July’s 26-month low.
Hong Kong‘s PMI fell to a 5-month low of 51.2.
S&P Global’s Australian composite and services PMI readings of 50.2 were both the lowest since January, and the AIG-compiled Australian construction purchasing managers index , although at a 3-month high, stayed below 50 with a reading of 47.9.
India’s services PMI rose from a 4-month low of 55.0 in July to a 2-month high in August of 57.2.
Non-oil PMIs for Egypt, Saudi Arabia, and the U.A.E. improved to 7-, 10-, and 38-month highs in August, and Lebanon’s manufacturing PMI, a data series that only began in 2014, crossed above 50 for the first time (50.1).
Vietnam‘s manufacturing PMI also improved, rising from a 4-month low in July to a 2-month high of 52.7 in August.
The South African PMI, in contrast, dropped a full point below July’s 14-month high to a 3-month low of 51.7.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland retail sales, Liz Truss, service sector purchasing managers survey results, Turkish CPI and PPI
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