Dollar and Equities Up on Day Before Threatened Tariff Hike – Currency Thoughts
Dollar and Equities Up on Day Before Threatened Tariff Hike
January 31, 2025
The dollar rose overnight by 0.8% against the Mexican peso, 0.4% relative to the yen and won, 0.2% vis-a-vis the Chinese yuan, and 0.1% versus the euro and sterling.
Stock markets remained on holiday in China, Taiwan and Hong Kong but rose 1.4% in Singapore. Major European equity indices are up modestly, and U.S. stock futures have risen somewhat more steeply, led by tech following better-than-anticipated Apple corporate earnings reported late yesterday.
Gold advanced as high as $2,853 per troy ounce, a new intra-day high. There’s been scant change in prices for oil or Bitcoin thus far today.
The U.S. personal income, personal consumption expenditures, and PCE price deflator data were generally in line with expectations, and so the overnight rise of the 10-year U.S. Treasury yield was held to just a basis point. Comparable European sovereign debt yields are a tad lower, while the 10-year Japanese JGB is 3 basis points firmer.
Several Japanese data were reported overnight:
- Industrial production rose 0.3% on month but fell 1.1% on year in December. Output declined 2.3% in full 2024 after slides of 1.1% in 2022 and 1.3% in 2023.
- Although retail sales fell 0.7% last month, their 3.7% 12-month rate of increase was the most in six months.
- Japan’s jobless rate slid 0.1 percentage point to a 3-month low of 2.4% in December, marking the fifth straight month at either 2.4% or 2.5%.
- Housing starts fell 2.5% compared to a year earlier in December, their eighth such drop in a row. But construction orders were 8.1% greater than a year earlier.
Consumer price inflation in Germany unexpectedly slowed 0.3 percentage points in January to a 2-month low of 2.3%, according to preliminary measurements. From an 8.8% peak in November 2022, German CPI inflation had decelerated to a 42-month low of 1.6% last October.
French CPI inflation ticked up 0.1 percentage point to 1.4% this month, still not far above September’s 42-month low of 1.1% and well under the ECB’s 2.0% target. French producer prices ended 2024 3.8% below year-earlier levels, their least negative reading of the year.
Italian producer prices advanced 0.6% on month and 1.1% on year in December. Belgian producer price inflation extended its move into positive territory, printing at 1.9% last month after 0.5% in November and -1.8% in October.
Australian producer price inflation slowed to a three-year low of 3.7% last quarter.
Filipino PPI inflation of 0.2% in December was its lowest since October.
German retail sales tumbled 1.6% in December, their biggest monthly decline in 22 months, and posted only a 0.9% increase for 2024 as a whole. Within the euro area, Germany ranks near the bottom in growth, while Spain has been one of the bright spots. Germany also reported today that unemployment rose to a four year three month peak of 6.2% in January, while Spain announced that retail sales had increased in December by 1.5% on month and 4.0% on year.
The Central Bank of Argentina’s policy interest rate has been reduced another 300 basis points following a similar cut in December, a five percentage point reduction in November and a combined 60 percentage points of easing in the first half of last year. At 39%, the new rate level is down from 126% reached for a brief two months before the initial cut of this cycle in December 2023. Likewise Argentine consumer price inflation has receded from 292% in April 2024 to a 17-month low of 117.8% last month. Core inflation has shrunk more quickly to 105% from 300%.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Argentina, German and French CPI, U.S. personal income and spending
ShareThisYou can leave a response, or trackback from your own site.
