Dollar Strengthens Ahead of Release of U.S. Personal Consumption Price Deflator
February 24, 2023
Broad-based dollar strength overnight has yielded appreciations of 0.8% against the Australian and New Zealand dollars, 0.7% relative to the yen, 0.5% versus the yuan, 0.4% vis-a-vis the loonie, peso and sterling and 0.3% against the euro. The weighted DXY dollar index is 3.6% above its level at the start of this month.
Ten-year sovereign debt yield have risen three basis points in the U.S. and a basis point in the U.K. and Germany.
Gold fell yesterday and is trading near its 2023 low but hasn’t lost additional net ground today. WTI oil is up 0.4%.
U.S. stock futures and Continental European stock markets are showing red. Share prices lost 1.7% in Hong Kong, 0.7% in Taiwan, and 0.6% in South Korea and China but rose 1.3% in Japan.
Japanese total and core consumer price inflation in January rose to a 493-month high of 4.3% and a 496-month high of 4.2%, respectively, despite a smaller 14.6% on-year rise in energy prices. The CPI excluding food and energy printed at 3.2% versus minus 1.1% in January 2022.
Icelandic producer prices shot up 1.7% on month in January, their steepest monthly advance in 9 months, and were 9.4% above a year earlier versus 12-month increases of 8.5% in December and 3.5% in November.
Spanish producer price inflation fell sharply in January to a 23-month low of 8.2% from 14.9% in December and 47% last March.
Malaysian CPI inflation ticked downward 0.1 percentage point in January to a 7-month low of 3.7%.
Several countries reported consumer confidence today. German consumer sentiment improved to an 8-month high but stayed historically pessimistic with a reading of -30.5. Likewise for British consumer confidence that climbed 7 index points to a 10-month high of -38. Swedish consumer confidence reached a 3-month high of 59.9 but was well below 89.0 a year earlier. French consumer sentiment slid to a 2-month low of 82 and has fluctuated narrowly between 80 and 84 since last June compared to a reading of 97 a year ago. Brazilian consumer sentiment dropped to a 6-month low of 84.5 in February, having hit a 30-month high last September. And Czech consumer confidence measured 92.5 this month, best in a year and 15 index points above last October’s record low of 72.7.
Swedish business confidence improved to a 5-month high in February, printing at 88.9 versus 115.0 a year earlier. In contrast Czech business sentiment fell to a 23-month low this months.
German GDP growth last quarter was revised to minus 0.4%, twice the size of the originally estimated contraction. This was the first sub-zero outcome in seven quarters and associated with a 7-quarter year-on-year low as well, which was only 0.9%. Personal consumption and business investment in both machinery & equipment and construction fell during the quarter. So did exports but not as rapidly as the drop of imports.
Swiss jobs increased 2.3% on year last quarter versus a 1.9% advance in 4Q 2021.
Austria’s manufacturing purchasing managers index slipped to a 3-month low of 47.1 in February, marking the seventh straight sub-50 result. Sub-50 readings connote declining activity.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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