Dollar Down in Pre-Open Trading
February 9, 2023
The dollar fell broadly overnight, dropping 0.9% against the Australian and New Zealand dollars, 0.7% versus sterling, 0.5% relative to the euro and in weighted terms, 0.4% vis-a-vis the Japanese yen and Canadian dollar and 0.2% against the Chinese yuan.
Equity markets have strengthened amid favorable earnings reports and soothing remarks from President Biden touting U.S. economic resilience and denying that U.S.-Sino tensions have become even more strained in the wake of the shot-down spy balloon. Stock markets closed up 1.6% in Hong Kong and 1.2% in China. German and French share prices so far are up 1.3%, and Italy’s market has done even better. U.S. futures are up 0.5-1.0%.
Ten-year sovereign debt yields in Europe have dropped 11 basis points in Italy, 9 bps in Germany, Spain and the Netherlands, 8 bps in France and 7 basis points in the United Kingdom. The 10-year U.S. Treasury yield’s 2-bp decline has been small by comparison, and Japan’s 0.49% 10-year JGB yield is pressing even more closely to the Bank of Japan’s cap.
Prices for Bitcoin and WTI oil are 1.1% and 0.8% softer. That for gold has edged 0.2% higher.
A summit of EU leaders begins today. Central bank rate hikes were announced today in Sweden and Serbia. Central bank policymakers are also deciding rate levels in Peru, Mexico and Romania.
Among several countries reporting January consumer price figures today, Germany’s release is the most significant and most reassuring.
- Delayed by a 5-year rebasing of the data series, German on-year CPI inflation edged up less than forecast, rising just 0.1 percentage point above December’s 8.6% 4-month low. Inflation crested at 10.4% in October and was 4.9% in January 2022.
- Dutch CPI inflation slowed to an 11-month low of 7.6% last month from 9.6% in December and a September high of 14.5%. Core inflation ticked 0.2 percentage points higher, however, to a record 6.4%.
- Brazilian CPI inflation of 5.77% in January was the lowest in 23 months and down from 12.1% last April.
- Mexican CPI inflation ticked 0.1 percentage point higher to a 3-month high of 7.91%, still below September’s recent peak of 8.7%.
- In Egypt, consumer price inflation of 25.8% last month was the most in 61 months and up from 7.3% a year earlier.
- Taiwanese CPI inflation of 3.0% last month was at a 6-month high but comparatively low by global standards.
Other data released around the world today attested to the fact that monetary restraint and elevated inflation are cooling down demand and production.
A 9.6% slump in Japanese machine tool orders last month was the second sizable year-on-year decline in three months. Japanese M3 money growth of 2.7% was down from 3.0% in the fourth quarter.
A 0.7% on-year increase in Indonesian retail sales in December was the smallest 12-month rise in a streak of 15 advances in a row. Brazilian retail sales in December plunged 2.6% below November’s level. The decline far exceeded expectations and left sales only 0.4% above their year-earlier level.
Australian building permits soared 18.5% higher in January than December, beating analyst expectations.
The Royal Institute of British Chartered Surveyors monthly house price index fell to a 165-month low last month.
Factory output in South Africa was 4.7% below its year-earlier level in December.
New U.S. jobless insurance claims last week were 13k greater than in the final week of January, and continuing jobless insurance claims climbed 38k to a 5-week high.
The Executive Board at the Swedish Riksbank hiked their policy interest rate to a 15-year high of 3.0% from 2.5%. The pace of the central bank balance sheet reduction will also be increased in April via outright selling of Swedish government bonds, and the Board’s statement includes forward guidance indicating ” that the policy rate will probably be raised further during the spring.” Despite 250 basis points of tightening from zero percent as recently as April 2022 and signs that Sweden’s economy is cooling, inflation accelerated to a 378-month high of 12.3% in December. That’s way above the 2% target, and core inflation of 10.2% after 9.3% in November is also going the wrong direction. Today’s actions are meant not only to dampen inflation expectations but also to lend support to the krona, whose depreciation has made the central bank’s mandate harder to achieve.
Executive Board members at the National Bank of Serbia today authorized their 11th consecutive interest rate since April, but the 25-basis point size of the increase both today to 5.5% and at January’s policy review were only half the 50-bp size of the final four hikes done in 2022. Tightening began last April from a 1.0% level. Officials are now assessing “whether there is a need for additional tightening of monetary conditions and to what extent, while taking into account the expected effects of past monetary tightening on inflation going forward.” But at best, Serbian consumer price inflation has only crested at at a record 15.1% hit in November and matched in December. Officials aim to counter second-order cost-push pressures and to limit dinar depreciation. They are also counting on lower energy prices especially in the second half of 2023, which seems to be based upon wishful thinking that the war in Ukraine will subside.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Biden comments, German CPI, National Bank of Serbia, Swedish Riksbank
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Dollar Down in Pre-Open Trading
February 9, 2023
The dollar fell broadly overnight, dropping 0.9% against the Australian and New Zealand dollars, 0.7% versus sterling, 0.5% relative to the euro and in weighted terms, 0.4% vis-a-vis the Japanese yen and Canadian dollar and 0.2% against the Chinese yuan.
Equity markets have strengthened amid favorable earnings reports and soothing remarks from President Biden touting U.S. economic resilience and denying that U.S.-Sino tensions have become even more strained in the wake of the shot-down spy balloon. Stock markets closed up 1.6% in Hong Kong and 1.2% in China. German and French share prices so far are up 1.3%, and Italy’s market has done even better. U.S. futures are up 0.5-1.0%.
Ten-year sovereign debt yields in Europe have dropped 11 basis points in Italy, 9 bps in Germany, Spain and the Netherlands, 8 bps in France and 7 basis points in the United Kingdom. The 10-year U.S. Treasury yield’s 2-bp decline has been small by comparison, and Japan’s 0.49% 10-year JGB yield is pressing even more closely to the Bank of Japan’s cap.
Prices for Bitcoin and WTI oil are 1.1% and 0.8% softer. That for gold has edged 0.2% higher.
A summit of EU leaders begins today. Central bank rate hikes were announced today in Sweden and Serbia. Central bank policymakers are also deciding rate levels in Peru, Mexico and Romania.
Among several countries reporting January consumer price figures today, Germany’s release is the most significant and most reassuring.
Other data released around the world today attested to the fact that monetary restraint and elevated inflation are cooling down demand and production.
A 9.6% slump in Japanese machine tool orders last month was the second sizable year-on-year decline in three months. Japanese M3 money growth of 2.7% was down from 3.0% in the fourth quarter.
A 0.7% on-year increase in Indonesian retail sales in December was the smallest 12-month rise in a streak of 15 advances in a row. Brazilian retail sales in December plunged 2.6% below November’s level. The decline far exceeded expectations and left sales only 0.4% above their year-earlier level.
Australian building permits soared 18.5% higher in January than December, beating analyst expectations.
The Royal Institute of British Chartered Surveyors monthly house price index fell to a 165-month low last month.
Factory output in South Africa was 4.7% below its year-earlier level in December.
New U.S. jobless insurance claims last week were 13k greater than in the final week of January, and continuing jobless insurance claims climbed 38k to a 5-week high.
The Executive Board at the Swedish Riksbank hiked their policy interest rate to a 15-year high of 3.0% from 2.5%. The pace of the central bank balance sheet reduction will also be increased in April via outright selling of Swedish government bonds, and the Board’s statement includes forward guidance indicating ” that the policy rate will probably be raised further during the spring.” Despite 250 basis points of tightening from zero percent as recently as April 2022 and signs that Sweden’s economy is cooling, inflation accelerated to a 378-month high of 12.3% in December. That’s way above the 2% target, and core inflation of 10.2% after 9.3% in November is also going the wrong direction. Today’s actions are meant not only to dampen inflation expectations but also to lend support to the krona, whose depreciation has made the central bank’s mandate harder to achieve.
Executive Board members at the National Bank of Serbia today authorized their 11th consecutive interest rate since April, but the 25-basis point size of the increase both today to 5.5% and at January’s policy review were only half the 50-bp size of the final four hikes done in 2022. Tightening began last April from a 1.0% level. Officials are now assessing “whether there is a need for additional tightening of monetary conditions and to what extent, while taking into account the expected effects of past monetary tightening on inflation going forward.” But at best, Serbian consumer price inflation has only crested at at a record 15.1% hit in November and matched in December. Officials aim to counter second-order cost-push pressures and to limit dinar depreciation. They are also counting on lower energy prices especially in the second half of 2023, which seems to be based upon wishful thinking that the war in Ukraine will subside.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Biden comments, German CPI, National Bank of Serbia, Swedish Riksbank
This entry was posted on Thursday, February 9th, 2023 at 7:26 am and is filed under New Overnight Developments Abroad - Daily Update. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.