Yesterday’s Dollar Rebound Already Petering Out

Yesterday’s Dollar Rebound Already Petering Out

January 30, 2018

The dollar‘s advance on Monday was trimmed by overnight losses of 0.5% against the Swiss franc, 0.3% relative to the euro and yen, 0.2% vis-a-vis the New Zealand and Australian dollars, and 0.1% versus the loonie and sterling.

Investors want to see exactly what President Trump presents in tonight’s state of the union address and are spooked by the Mueller investigation and whether Trump has attempted to intentional obstruct such.

The 10-year Treasury yield went over 2.70% Monday for the first time since early 2014. While such eased back to 2.68% in futures trading overnight, there’s concern over the ramifications of a continuing possible climb to 3.0% or above.

Following a sharp drop Monday in U.S. share prices, equities dropped overnight by 1.6% in Hong Kong and Indonesia, 1.4% in Japan, 1.3% in Taiwan, 1.2% in South Korea, 1.0% in China, 0.9% in Australia, and 0.8% in Singapore. In Europe, stocks so far are down 0.8% in Spain, 0.5% in the U.K., 0.4% in Italy, 0.3% in Germany and 0.2% in France.

Ten-year German bund and British gilt yields slipped 2 and 1 basis points.

WTI oil softened 0.7%. Gold edged 0.2% higher, but industrial metals fell.

Economic sentiment in Euroland unexpectedly slipped back in January, printing at 114.7, 0.6 points below December’s 17-year high. Whereas consumer confidence and construction sentiment continued their trends of improvement, sentiment in services and retail posted two-month lows, and industrial sector confidence was unchanged.

The first indication of Euroland real GDP growth in the final quarter of last year shows a quarterly rise of 0.6% after back-to-back 0.7% increases and a 0.1 percentage point downtick of on-year growth to 2.7%. Average GDP growth last year of 2.5% exceeded the U.S. pace of 2.3%.

French real GDP also went up 0.6% in the fourth quarter, lead by a 0.8 percentage point contribution from net foreign demand. GDP was 2.4% higher than in the final quarter of 2016. A separate French release revealed a 1.2% drop in consumer spending along with only a 1.0% on-year rise in December.

Spanish GDP growth slowed to a 4-quarter low of 0.7% in the final quarter of 2017, but on-year economic growth held steady at the third quarter’s 3.1% pace, and growth for the year as a whole also averaged 3.1%.

Between end-2016 and end-2017, producer prices edged down 0.1% in Iceland. Austrian PPI inflation slowed to 1.4% last month from 2.1% in November.

Dutch producer sentiment improved to a 10-year high in January.

Japan’s jobless rate edged back to 2.8%, matching the level in September and October after a dip to 2.7% in November. On-year jobs growth slowed to 0.6% from 1.2% the month before, but the job offers-to-applicants ratio continued to climb, reaching 1.59 after 1.56 in November, 1.55 in October and 1.52 in September.

Japanese real household income increased 0.4% between end-2016 and end-2017. Retail sales in the same span climbed 3.6%.

New Zealand recorded trade surpluses of NZD 640 million in December and NZD 4.9 billion in 2017.

The NAB measures of Australian business conditions rose a point to a 2-month high of 13, while business confidence climbed 4 points to 5-month high of 11.

Italian consumer confidence failed to rise further as had been expected in January, instead falling 1.1 points to a 2-month low of 115.5. Overall economic sentiment dropped 3.1 points to a 6-month low of 105.6.

The Swiss trade surplus last year of CHF 34.8 billion was marginally smaller than that of CHF 36.9 billion in 2016. KOF reported an unexpectedly large decline of its index of Swiss leading economic indicators to 106.9 in January from 111.4 in December.

On-year CPI inflation fell this month in the German states of Baden-Wuerttemberg to 1.7% from 1.8% and Saxony to 1.4% from 1.7% and remained unchanged at 1.5% in North Rhine Westphalia, which is the state with Germany’s highest population.

The Bank of England’s estimate of mortgage approvals in December, 61,039, was the smallest in 35 months.

South African on-year M3 money growth settled back to 6.41% in December from 6.61% in November and 5.01% in October. But private credit expansion continued accelerating to 6.72% after 6.48% the month before and 5.42% in October.

By a 4-3 vote, officials at the Central Bank of Colombia unexpectedly cut their key interest rate by another 25 basis points to 4.5%. The rate had not been changed at December’s meeting but was lowered in November and has now been reduced by three percentage points since December 2015. Analysts were not expected a reduction this month insofar as CPI inflation of 4.1% in December exceeded the 2-4% target, but officials assert that price pressure will subside in the months ahead.

The U.S. monthly Case Shiller house price index gets released later today.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Central Bank of Colombia, Euroland economic sentiment, Euroland GDP, Japanese labor statistics


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