Another Strong Performance for Crypto and the Dollar
November 14, 2024
Prior to today’s release of U.S. October producer price figures, the weighted DXY dollar index had advanced another 0.3% to a two-year high. There were gains of 0.3% relative to the Swiss franc, sterling and yen and by 0.2% relative to the euro, kiwi and Australian dollars. The dollar got as firm as JPY 156.24 versus a brief peak of 162, and it moved above 1.40 Canadian dollars, not far from the all-time peak of 1.4565 set on February 4, 1986.
Crypto is benefiting even more than the dollar from Donald Trump’s election victory, with a net Bitcoin price gain overnight of 0.8% after a new intra-day record peak of $93,469.
The dollar’s gain has been gold’s loss, as the yellow metal sank 1.1% and below $2600 to 2,559 per ounce. West Texas Intermediate oil advanced 0.6%. Net movement in 10-year sovereign debt yields had been unremarkable.
Equity performances early Thursday have been mixed, with U.S. stock futures pretty flat shortly before the PPI news, European exchanges up over 1.0% in Germany, France and Italy, but downward closing prices in Asia of 1.7% in China, 2.0% in Hong Kong, 1.3% in Indonesia, 0.6% in Taiwan and 0.5% in Japan.
U.S. producer price results for October slightly exceeded expectations, and September PPI inflation got revised a bit upward, too. U.S. stock futures dipped a bit on the news at first, and the 10-year Treasury yield went up by two basis points. Total PPI inflation of 2.4% last month was a half percentage point above September’s 12-month rate of increase and the most since 2.9% in June. PPI inflation had slowed from an 11.7% peak in March 2022 to just 0.3% by mid-2023. Producer price inflation excluding food and energy of 3.1% in October also exceeded expectations by 0.1 percentage point, and the PPI ex food, energy and trade figure rose to a 19-month high of 3.5%.
Jobless insurance claims figures last week depicted a comparatively tight labor market. New claims fell 4 thousand to 217k, lowest since the week of May 18th, and the four-week average number of new claims (221k) also was the fewest since that time.
Today’s other potential market-moving event will be a speech on the economy and policy delivered by Fed Chairman Powell in Dallas at 3:00 EST.
In other economic news today, Euroland reported revised third quarter GDP and employment growth as well as September industrial production. GDP expanded 0.4% on quarter, twice as fast as in the second quarter and resulting in the strongest four-quarter pace (alas still only 0.9%) since the first quarter of 2023. These changes matched preliminary indications reported on October 30.
Within the euro area, the strongest quarterly GDP gains occurred in Ireland (2.0%), Lithuania (1.1%), Cyprus (1.0%), Spain and the Netherlands (each 0.8%), and France and Finland (each 0.4%). German GDP swung from a 0.3% dip in 2Q to +0.2% and Belgian GDP also increased 0.2% versus 2Q. Italian GDP stagnated, its worst quarterly performance since late 2023.
Third-quarter employment in the euro area climbed 0.2% compared to the prior quarter and 1.1% on year. Those gains aligned with analyst expectations.
The September industrial production figures from Euroland were disappointing. A monthly drop had been anticipated, reversing August’s unexpectedly large 1.5% advance. Instead, production tumbled 2.0% and was also 2.8% lower than in September 2023. Capital goods output slumped 3.8% in the latest month, and energy fell by 1.5%.
Swedish GDP posted a second consecutive quarterly contraction of GDP, this time by 0.1% that resulted in a 0.1% decline from the third quarter of 2023 as well.
Indian wholesale price inflation accelerated to a four-month high of 2.36% in October, with the food component (11.4%) and manufacturing (1.5% after 1.0%) contributing to the rise.
Food prices in New Zealand, by contrast, were only 1.2% higher than a year earlier in both September and October.
Spain confirmed the preliminary estimate of consumer price inflation, which showed a monthly increase of 0.6% after September’s 0.6% decline and a twelve-month rate of increase of 1.8% versus the 42-month low of 1.5% in September.
In Finland, consumer price inflation rose from a 45-month low of 0.8% in September to 1.1% last month.
Britain’s Royal Institute of Chartered Surveyors’ monthly housing price index rose to a 25-month high last month.
Australia’s monthly labor market data showed a third straight 4.1% rate of unemployment but also a smaller 15.6k rise in jobs than expected or seen in recent months. The labor market participation rate fell back to August’s 67.1% after ticking up to a record high 67.2% in September.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland GDP and employment growth, Euroland industrial production, Powell speech, U.S. PPI
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