Dollar Recovers Some Ground

November 25, 2022

The dollar rose overnight by 0.6% against the yen, Swiss franc, and both Australian and New Zealand dollars. The dollar also climbed 0.5% versus the euro and 0.4% relative to the Canadian dollar and sterling.

U.S. financial markets will close early today at 13:0o EST for equity trading and 14:00 EST (19:00 GMT) in the bond market. A four-basis point overnight rise in the 10-year Treasury yield has been exceeded today by rises of 18 basis points, 13 bps,, 11 bps and 6 bps, respectively, in comparable Italian, French, German and British sovereign debt yields. Overnight stock market movements around the world today have been inconsequential and at the open for the S&P 500 and Dow. The tech-intensive Nasdaq is 0.5% lower.

Prices for Bitcoin and WTI oil are respectively down 0.7% and up 0.5%.

In central banking news this Friday, the Peoples Bank of China reserve ratio was lowered by 25 basis points to release some liquidity and support growth, which has been underperforming.

Also, the Central Bank of Pakistan’s policy interest rate has been increased by a full percentage point to 16.0%, still well below consumer price inflation in that economy. Pakistan’s CPI leaped 4.7% on month and accelerated 3.4 percentage points to an on-year pace  of 26.6% in October, not far below August’s peak of 27.3%. The central bank interest rate during the pandemic’s early days had been lowered from 13.25% to 7.0%, but seven increases since September 2021 have more than reversed that easing.

Price data released today revealed

  • A 40-year high in Tokyo core consumer price inflation of 3.6% in November. Price data for Tokyo are released a month ahead of Japanese national CPI figures. Core CPI excludes fresh food but not energy.
  • Japanese corporate service price inflation settled back from September’s 3-month high of 2.1% to 1.8% in October.
  • Swedish producer prices dropped 2.3% on month in October, trimming their 12-month rate of increase to an 11-month low of 18.7%.
  • Similarly, Spanish producer prices fell 1.4% on month and to a 13-month year-on-year low of 26.1% last month.
  • Malaysian consumer price inflation slowed to a 4-month low 4.0% in October from 4.5% in September and 4.7% in August.

German GDP growth last quarter has been revised upward by 0.1 percentage point to show a quarterly rise of 0.4% and a year-on-year pace of 1.3%.

Indicators of German, French, and Italian consumer confidence were reported today. Germany’s reading improved to a 3-month high but at -40.2 was far weaker than its year-earlier score  of -1.6. French consumer sentiment rose to a 6-month high, and Italian consumer confidence in October punched in at a 3-month high after sinking to a 10-month low in September. Business confidence in Italy also strengthened to a 3-month high.

After diving 6.0% below its year-earlier level in September, British car production recorded on-year growth of 7.4% in October.

Mexico’s monthly index of economic activity rose o.7% in September and exceeded its year-earlier level by 5.2%. Mexican GDP in 3Q grew 0.9% on quarter and also posted a one-year year-on-year high of 4.3%.

Elevated inflation has taken a big toll on household spending in many economies around the world. Retail sales in New Zealand had dropped 5.2% on year between the third quarters of 2021 and 2022 and rebounded only 4.9% over the ensuing four quarters to 3Q 2022. Danish retail sales in October fell 1.7% on month and 10.3% on year. It’s good  to be the party in opposition when inflation spikes because you can blame the party in  power for a largely global phenomenon.

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



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