A Quiet Day Ahead of U.S. Price Data Due Tomorrow and Friday
August 9, 2023
Overnight dollar movements range between +0.2% against the peso and Turkish lira to -0.2% versus the euro and renminbi. Equities recovered some ground after Italy’s government scaled back its windfall profits levy on banks. Share prices have rebounded 2.0% in Italy and 0.9%-1.3% in the U.K., Germany, France, and Spain. The Japanese Equities closed down 0.5% in Japan and China but up 1.2% in South Korea and 0.5% in China.
10-year sovereign debt yields are up 2 basis points in the U.K., 3 bps in German and 1 basis point in the United States but 2 bps lower in Japan. There’s been scant price movement in crypto or gold, but oil’s firming trend resumed with a 1.1% overnight advance.
Chinese consumer price data for July arrived slightly to the upside relative to expectations, but the PPI came in lower. CPI inflation of -0.3% after zero percent in June constituted a 30-month low and a 3.1 percentage point deceleration from last September’s 29-month peak. Core consumer price inflation of 0.8% doubled June’s 27-month low and was its highest since January. Producer prices posted a 4.4% 12-month rate of decline after June’s -5.4% result, which had been its most negative in 73 months. PPI inflation crested a year ago at 2.3%. Chinese food price inflation fell below zero percent last month for the first time since March 2022.
Colombian CPI inflation slowed to a 10-month low of 11.8% in July, having crested last February at 13.3%.
U.S. CPI data get released tomorrow, followed by the PPI report on Friday, but the next FOMC review of monetary policy is still six weeks away.
August is a month when market participants often take time off for vacation, thinning trading volume. This lull should not be mistaken for foreign exchange inaction, however. Many inflections points have occurred during past Augusts, including the dollar being severed from gold in 1971, the start in 1981 of a dollar down-correction within what became a five-year major rise of the dollar,Iraq’s invasion of Kuwait in 1990, and the initial emergence of the subprime mortgage crisis in 2007.
Former President Nixon resigned exactly 49 years ago today in connection with revelations of his attempts to cover up the White House’s orchestration of the Watergate break-in and other related abuses of presidential power. Another former Republican President, Donald Trump, is waging a media fight against indictments alleging even more blatant political crimes on his watch.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China CPI and PPI
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