Dollar Rebounds on Fed Comment

November 14, 2022

Federal Reserve Governor Waller opined that financial markets had over-reacted to the lower-than-expected U.S. October CPI inflation data. The remark was predictable, since Fed officials for years have said that policy is not guided by single data points. Nonetheless, on a day with few data releases his comment has been the day’s leading financial market impulse.

The DXY weighted dollar index is up 0.9% including gains of 1.3% against the yen, 0.6% against the Swiss franc and 0.7% relative to the euro and sterling.

The ten-year U.S. Treasury yield jumped 8 basis points in contrast to declines today of six and four basis points in comparable British and German sovereign debt instruments.

U.S. stock futures are somewhat lower. Asian equities closed mixed with a 1.7% increase in Hong Kong, a 0.1% dip in China and a 1.1% loss in Japan. European stock markets have risen somewhat, aided by a better than expected 0.9% increase in Euroland industrial  production in September.

Prices for oil and gold have fallen 1.2% and 0.6%.

The 0.9% rise of euro area industrial production in September boosted the 12-month rate of increase to 4.9% from 2.8% in August and was led by capital goods whose output advanced 1.5% on month and 13.5% on year. The 0.9% overall monthly increase masked monthly declines in French, Italian and Spanish industrial production.

Indian consumer price inflation slowed from a 5-month high of 7.4% in September to 6.8% last month. CPI inflation had been at 9.5% in October 2021.

Indian wholesale price inflation dropped to a 19-month low in October of 8.4% from 10.7% in September.

The combined Swiss PPI/import price index was unchanged on month in October, depressing the on-year inflation rate to a 13-month low of 4.9% from 5.4% in September.

Ireland’s construction purchasing managers index fell back below 50 to a 2-month low of 47.4 last month.

New Zealand’s services PMI rose to a robust 2-month high of 57.4 in October.

Finnish CPI inflation accelerated 0.2 percentage points to a 466-month high of 8.3% in October.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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