Final Week of 2024 First Half Finding Crypto and Yen Struggling to Stay Above Important Levels – Currency Thoughts
Final Week of 2024 First Half Finding Crypto and Yen Struggling to Stay Above Important Levels
June 24, 2024
The price of Bitcoin tokens plunged 3.5% overnight to a two-month low and within $860 of the psychological support of $60,000.
The Japanese yen touched a low of 159.81 per dollar. Japanese intervention sales of foreign currency this month has slowed the Japanese currency’s descent but not reversed the weak trend that stems from the Bank of Japan’s comparatively stimulative monetary stance. A published summary today of the BOJ Board’s meeting on June 13-14 failed to lend clarity to the policy exit path. The discussion highlighted concern that yen weakness might fuel excessive import-driven inflation but also the conflicting worry that consumer spending still lacks the kind of strength that officials would like to see. Some members want to more wage data before embarking on a more definitive withdrawal from the ultra-stimulative policy. While the summary dangles the possibility of a second hike of the 0-0.1% short-term interest rate target and a plan of balance sheet reduction, those possible changes so far remain only conjecture.
Ten-year sovereign debt yields rose overnight by three basis points in Germany, two bps in Japan, Italy and France, and a single basis point in the U.K., Spain and United States.
The dollar is 0.1% softer against the Swiss franc, sterling and Canadian, Australian and New Zealand currencies. Gold and oil prices are up 0.3% and 0.4%.
Equities show resilience at the start of this final week of June. European share price gains range from 0.6% in the U.K. so far upwards to 1.3% in Italy. The Japanese Nikkei closed 0.5% higher, and U.S. stock futures are up marginally.
The most significant data release this Monday has been a weaker-than-forecast German business climate index compiled by the IFO Institute. The overall reading for June, which analysts assumed would be above that in May, instead dropped 0.7 points to a 3-month low. At 88.6, it was much closer to January’s 44-month low of of 85.2 than to the post-Covid high of 101.2 touched in June 2021. Perceived current conditions did not deteriorate further than May’s 88.3 reading, but the expectations index fell by 1.4 points to 89.0. Among manufacturing, services, trade and construction, only services had a better reading for June than May. Summarizing the latest findings, IFO officials concluded that Germany’s economy “is having difficulty overcoming stagnation.”
After touching a 6-month low in May, the orders index in Britain’s CRB monthly industrial trends survey rebounded 15 points in June to a 3-month high but was still fairly depressed at -18.
Business confidence in June dropped to a 4-month low in Turkey but improved to a 15-month high in the Czech Republic. Czech consumer sentiment slid 0.6 points, however, to a 3-month low.
Dutch GDP edged down 0.1% last quarter, marking the fourth decline in the space of five quarters. Negative year-on-year growth of -0.7% matched the earlier estimated and contrasted with a 1.8% rise in the previous four quarters ending in 1Q 2023.
Consumer price inflation slowed to a 51-month low in May of 4.6% in Kyrgyzstan but increased to a 3-month high in Singapore of 3.1%. Producer prices in Finland were 0.4% lower than a year earlier, but that was considerably less than the -10.0% reading last July and the smallest 12-month rate of decline in a year and a half.
Switzerland’s CHF 16.1 billion current account surplus last quarter was roughly equivalent to 8.7% of GDP. The surplus to GDP ratios previously had been 7.6% in 2023 and 9.9% in 2022.
Chinese net foreign direct investment plunged 28.2% in January-May from the average level in the first five months of 2023. That rate of drop was over three times steeper that of 8.0% in full-2023. Investors around the world don’t trust President Xi’s intentions, nor his recent efforts to tighten alliances with Russia and North Korea.
Taiwanese industrial production jumped 16.1% between May 2023 and May 2024, the most in 34 months, while retail sales went up by a lesser 2.4%.
Major upcoming political events will be Thursday’s first of two scheduled U.S. presidential debates between Biden and Trump and next weekend’s first of two rounds in the French parliamentary election.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan Summary of June 2024 Board meeting, German buisness climate IFO
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