Softer Dollar as 2Q U.S. Growth Is Revised Slightly Lower
August 30, 2023
The dollar fell overnight by 0.7% against sterling, 0.4% relative to the euro, 0.3% against the Mexican peso, and 0.2% versus the loonie, Swiss franc, kiwi, and Aussie dollar. Alternatively, the greenback strengthened 0.8% against the Russian ruble and 0.6% against the Turkish lira.
Equities around the world are narrowly mixed. U.S. corporate profits last quarter unexpectedly rose (1.6%) but were still 6.2% below a year earlier.
The 10-year German bund yield rose three basis points in contrast to a 1-basis point dip in the U.S. Treasury yield.
The price of bitcoin rose 2.0%, and gold and oil prices are up by 0.5% and 0.3%.
U.S. GDP growth last quarter got revised down 0.3 percentage points to a quarterly 2.1%, marking the third similar result in a row after back-to-back 2.0% growth rates in the last quarter of 2022 and first quarter of 2023. Real GDP was 2.5% greater than a year earlier. The personal consumption price deflator posted a quarterly 2.5% increase (3.7% for the core PCE), down from 4.1% (4.9% core) in 1Q and 6.6% (5.0% core) in the second quarter of 2023.
The U.S. merchandise trade deficit in July widened 2.6% to $91.18 billion as exports and imports posted monthly increases of 1.5% and 1.9%.
ADP’s monthly estimate of U.S. private-sector employment growth in August (177k) was the lowest since March and 52% less than the estimate for July.
U.S. pending home sales, which had been forecast to drop in July, instead rose for the second time in two months, this time by even more than in June. Mortgage applications fell last week for the first time in six weeks.
Economic sentiment in the euro area dropped 1.2 index points to a 33-month low in August. Indices for manufacturing, services and retail printed at their weakest levels in three years, 10 months, and 9 months. Construction sentiment became more negative, and inflation measures moved higher.
Japanese consumer confidence slid 1.1 index points below July’s 19-month high in August. A member of the Bank of Japan Board expressed the view that officials within a half year might have enough information to be confident that sustained 2% CPI inflation has been achieved. Next year’s round of wage increases will be critical to this determination.
German CPI inflation slowed 0.1 percentage point to 6.1% in August, matching May’s 14-month low. German import prices fell 0.6% on month and 13.2% on year in July, which was the largest 12-month drop in 439 months.
Spanish consumer prices rose 0.5% in August, lifting the 12-month rate of inflation to a 3-month high of 2.6%, still well below the 37-year peak of 10.8% in July 2022.
Austrian producer price inflation (-1.3%) was its most deflationary in 32 months in July and down from 22.1% posted last September.
Belgian CPI inflation of 4.1% this month represents a 23-month low and merely a third of the 568-month peak of 12.3% last October.
Icelandic CPI ticked 0.1 percentage point higher to a 2-month high of 7.7% in August, having peaked a half year earlier at 10.2%.
Producer prices in Brazil fell 1.1% on month and 14.1% on year in July.
Business confidence measures for Spain and Portugal respectively printed at a 3-month high and a 6-month low in August. Swiss business confidence fell to a 3-month low, and economic sentiment in Switzerland deteriorated to a 5-month low.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland economic sentimente, German CPI and import prices, Japanese consumer confidence, U.S. GDP and goods trade deficit
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