Dollar Kicks Off Week on a Positive Note – Currency Thoughts
Dollar Kicks Off Week on a Positive Note
October 14, 2024
The weighted DXY dollar index rose 0.3% overnight to a nine-week high, with gains of 0.6% against the Swiss franc, kiwi and Aussie dollar, 0.4% relative to the Japanese yen, 0.3% versus the Chinese yuan and 0.2% vis-a-vis the euro, loonie, and sterling.
Holidays today: Japan was closed for Health-Sports Day, and Canadians will be observing their Thanksgiving. In the United States, where it’s Indigenous Peoples’ Day, the stock market will be open, the Federal Reserve is closed, and some but not all commercial bank are also closed.
The 10-year British gilt yield jumped four basis points, but other European sovereign debt yields have hardly moved.
Bitcoin and oil prices moved sharply but in opposite directions, with crypto advancing 3.5% while oil stumbled 2.0%.
The Shanghai Composite stock index rose 2.1% even though analysts were disappointed by the lack of detail in the latest Chinese fiscal package unveiled on Saturday. Stock markets around the Pacific Rim closed higher alos in South Korea, India, Singapore, Australia and Indonesia but with losses in New Zealand and Hong Kong. The British FTSE is flat, while the German Dax and Paris CAC are respectively up 0.3% and down 0.3%.
Several Chinese and Indian economic indicators were reported.
- In China, where the specter of deflation remains, total consumer price inflation slowed to a 3-month low of 0.4% in September, and core CPI of only 0.1% was at a 43-month low. A 12-month 2.8% decline in producer prices was the most deflationary reading since last November and in sub-zero territory for a 24th straight time.
- China’s trade surplus of $81.7 billion in September was well below expectations at a 5-month low but still higher than $75.5 billion a year earlier. Year-on-year growth in both exports and imports was slower than posted in August.
- Year-on-year growth in China’s M2 stock of money recovered to a 3-month high of 6.8%, still well below the 9.7% increase last December. Moreover, yuan lending by banks last month was slower than in the previous five Septembers.
- Indian wholesale price inflation accelerated to a four-month high of 1.8%. As in most economies, such had previously decelerated very sharply from a high of 16.6% in 2022 to a low of -4.2% in 2023. The main factor behind September’s rise in WPI inflation occurred in food, whose 12-month increase leaped to 9.5% from 3.3% in the prior month.
- Indian consumer price inflation likewise accelerated sharply last month, printing at a 9-month high of 5.5% after 3.65% in August.
The quarterly policy review by the Monetary Authority of Singapore (MAS) ended with a decision to leave Singapore dollar settings unchanged once again. Monetary policy in Singapore is subordinated to an exchange rate target, defined by three parameters, the width of an allowable SGD trading range, the midpoint of that corridor, and the slope of the corridor. Officials are maintaining the same rate of appreciation, with no change in the range width or midpoint. The last change was made two years ago in October 2022 when the S-dollar’s then-current rate was adopted as the new range mid-point. CPI inflation of 2.2% in Singapore as of August was at a 40-month low.
Japanese industrial production continued to see-saw in Japan, falling 3.3% in August after rising 3.1% on month in July and dropping 4.2% in June. Likewise, a dive of 5.2% in the first quarter was followed by a 2.7% increase in the next quarter. Production, which contracted 1.3% in 2023, was 4.9% lower in August than a year earlier.
Ireland’s construction purchasing managers index (PMI) fell a full point in September to a 3-month low of 49.0.
New Zealand’s service sector PMI also signaled a contracting direction, being below the 50 breakeven level with a reading of 45.7. This matched August’s 3-month high.
The combined Swiss producer price/import price index dipped 0.1% on month and fell 1.3% on year in September. That was the 17th straight sub-zero year-on-year movement. Import prices were 3.5% lower than a year earlier, while domestic producer prices dipped 0.2% over the prior year.
The U.S. Nasdaq and S&P 500 opened in the black, while the DJIA dipped a bit.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China’s trade balance, Chinese and Indian consumer and producer price inflation, Japanese industrial production, Monetary Authority of Singapore, Swiss PPI
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