Approaching Monthend Brings Heavier Flow of Economic Data

Approaching Monthend Brings Heavier Flow of Economic Data

August 30, 2016

The dollar remains firm on the anticipation of a federal funds rate hike in September, contingent of course upon a decent U.S. monthly jobs report due this Friday. Fed Vice Chair Stanley Fisher elaborated further on previous hawkish remarks, noting that the labor market is nearing full employment conditions. The dollar is 0.4% stronger against the yen and up 0.2% relative to the Australian and New Zealand dollars. The dollar is steady against sterling and has settled back 0.5% versus the loonie, 0.2% against the euro and Swiss franc and 0.1% relative to the yuan.

Share prices overnight climbed 1.6^ in India, 1.0% in Hong Kong, 0.2% in China and 0.5% in New Zealand but edged 0.1% lower in Japan. Stocks in Europe have traded up 1.2% in Italy, 1.0% in Germany, 0.8% in Spain, 0.7% in Greece and France, 0.5% in Switzerland but just 0.1% in the U.K. where mortgage approvals slowed to an 18-month low.

The 10-year British gilt yield shot up eight basis points. The U.K. market had been closed Monday. German bunds are steady, and the 10-year Japanese JGB yield is a basis point softer.

Evidence of scarcer supply lifted West Texas Intermediate crude oil by 0.6% to $47.24 per barrel. Comex gold, which often trades inversely with the dollar, settled back 0.4% to $1,322.50 per troy ounce.

Japan released labor statistics, retail sales and household spending statistics.

  • The jobless rate fell to a new low for the move of 3.0% in July from 3.1% in June and 3.2% in April and May. On-year employment growth accelerated to 1.5%, but the job offers:seekers ratio held steady at 1.37.
  • Total retail sales increased 1.4% on month in July, trimming the on-year decline to just 0.2%. Large-store sales were 0.6% greater than a year earlier.
  • Real household consumer spending jumped 2.5% on month in July, most 16 months, but was 0.5% lower than a year earlier. Real income and real disposable income recorded on-year declines of 1.8% and 0.4%.

Building approvals in New Zealand sank 10.5% in July following a 21.9% leap in June. In contrast, building approvals in Australia jumped 11.3% last month after dropping 4.7% in June, and they were 3.1% greater than their year-earlier level.

Eurostat, the EU’s statistical agency, reported consumer and business sentiment measures for August. Euroland’s economic sentiment index fell 1.0 point to a 5-month low of 103.5. Consumer confidence was unchanged from its flash estimate but 0.6 points worse than July’s level. Industrial confidence printed at -4.4, 1.8 points lower than in July and the weakest reading in at least a year. The business climate index dropped 0.36 points to 0.02, worst in 34 months.

Among six reporting German states, CPI inflation slowed during August in four instances, rose in just Hesse, and stayed unchanged in Saxony.

German import prices edged up just 0.1% in July following month-on-month rises of 0.9% in May and 0.5% in June, but the 12-month rate of decline, 3.8%, was the smallest on-year drop in six months. Non-energy prices rose 0.3% on month but fell 1.9% on year.  Export prices posted a 1.2% 12-month decline.

According to preliminary calculations, Spanish consumer prices dipped 0.1% on year in August and were 0.3% lower on a harmonized basis that standardizes European inflation data.

Greek producer price deflation narrowed to 7.3% in July from 7.8% in June.

Italian retail sales rose 0.2% on month and swung from an on-year drop in May to a 12-month 0.8% rate of increase in June.

The Swiss index of leading economic indicators weakened sharply in August, falling to 99.8 from a 103.5 reading in July.

Austria’s manufacturing purchasing managers index fell 1.3 points in August to a 3-month low of 52.1. Austrian producer prices in July were 2.2% lower than a year earlier.

Polish GDP growth of 0.9% last quarter was unrevised from the initial estimate. On-year GDP growth of 3.1% was a half percentage point better than the first-quarter result.

In the year to July, industrial production and retail sales in Portugal respectively fell 1.6% and rose 4.6%. Consumer sentiment remained weak in August, printing at negative 13.1.

Scheduled U.S. data releases this Tuesday include the Case Shiller house price index, the Conference Board consumer confidence index and weekly Redbook chain store sales. Canada releases producer prices and the quarterly current account.

Tomorrow completes the middle third of 2016, and Friday will mark the end of the unofficial summer trading season in foreign exchange, which runs from the U.S. Memorial Day to the U.S. Labor Day holiday weekends.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Euroland economic sentiment, German PPI, Japanese unemployment




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