Putin & Trump Talks in Alaska – Currency Thoughts
Important Chinese, Japanese and U.S. Data Out… Next Up: Putin & Trump Talks in Alaska
August 15, 2025
The dollar fell overnight by 0.6% against the euro and peso, 0.5% versus the yen, and 0.3% relative to the Swiss franc and sterling.
Ten-year sovereign debt yields climbed eight basis points in France and Italy, seven bps in France and Spain, six bps in Germany but just two bps in Japan and a single basis point in the case of the U.S. Treasury.
Equities in the Pacific Rim closed this Friday up by 1.7% in Japan, 0.8% in China, 0.7% in Australia, and 0.4% in Taiwan and New Zealand but down 1.0% in Hong Kong, 0.6% in Singapore and 0.4% in Indonesia. There has been a dichotomy in European stock exchanges as well, with those in France, Italy and Spain showing gains but the German DAX and British FTSE down 0.1% and 0.3%. Like Thursday, the Russell 2000 has underperformed the DOW, SPX and Nasdaq so far in U.S. trading. Oil and Bitcoin prices have each lost some ground.
The day’s most awaited event is the meeting near Anchorage between Russian President Putin and U.S. President Trump. The talks are expected to commence at 15:30 EDT (11:30 local time). The fates of the Ukraine war, U.S. trade sanctions against Russia, and NATO’s future role could all be affected.
The opening act for this summit has been a flurry of significant data reports released today in China, Japan, and the United States.
Chinese July economic indicators highlight continuing struggles in the world’s second largest economy to achieve 5% growth. On-year growth in retail sales of 3.7% was at an 8-month low and down from an average 4.0% advance in the first half of 2025. A 5.7% year-on-year rise in industrial production was marked an 8-month low and compared unfavorably to a 6.4% increase in the first half. Fixed asset investment growth unexpectedly fell to 1.6% in January-July from 2.8% on average for the first six months of the year, and China’s jobless rate climbed 0.2 percentage points to a 4-month high of 5.2%. The 12-month drop in house prices of -2.8% was the smallest such decline in 16 months.
Japanese GDP expanded at a 1.0% annualized pace during the second quarter, up from 0.6% in the first quarter, but the year-on-year comparison dropped back to a 2-quarter low of 1.2% from 1.8% in 1Q 2025. On a brighter note, the rise of Japanese industrial production during June was revised higher to 2.1% from 1.7%. That was the largest monthly increase since February and associated with a 33-month high year-on-year advance of 4.4%. A 1.8% monthly drop in capacity utilization reversed a 2.0% increase during May.
U.S. import price data from July reinforced yesterday’s worrisome producer price news. The 0.4% monthly rise of import prices was the most in 13 months. Imported fuel costs jumped 2.7%, while all other items went up by 0.3%. The on-year increase of export prices (2.2%) contrasted with a 0.2% on-year dip in import prices. Meanwhile, consumer confidence suffered a setback this month according to the preliminary U. Michigan survey, falling to 58.6 from 61.7 in July and 74.0 last December. Even more worrisome, the one-year ahead index of consumers’ expected CPI inflation was 0.4 percentage points higher than in the July survey, and expected inflation in the long term likewise rose a half percentage point to 3.9%, far above what Fed officials consider acceptable. Among other U.S. data released today, industrial production slid 0.1% in July, just a tad less than consensus forecasts and resulting in the largest 12-month increase (1.4%) in a half year. Capacity utilization eased back to a 2-month low of 77.5%. Retail sales grew by an expected 0.5% in July and were 3.9% above their July 2024 level. The Empire State monthly manufacturing survey improved to a nine-month high, however.
Among other data news today, a 0.1% quarterly increase in Swiss GDP in 2Q was the slowest rise in two years. Switzerland has been the recipient of the largest U.S. import tariff among European economies.
GDP in Hong Kong rose 0.4% last quarter and was 3.1% greater than a year earlier.
Food prices in New Zealand were 5.0% above year-earlier levels in July, their largest increase in 20 months and up from -0.3% in June 2024. Al second New Zealand release today showed that the manufacturing purchasing managers index there returned to positive growth territory with a reading of 52.8 following back-to-back sub-50 scores of 47.6 and 48.8 in May and June.
Consumer price inflation in the former Soviet Republic of Kyrgyzstan accelerated to a 21-month high in July of 8.8% from 3.8% last August.
Danish producer price inflation reached a 3-month high of 9.8% last month, while Slovakian PPI inflation slid under zero percent to a 5-month low of -0.8%.
Canadian manufacturing sales rose 0.3% in June, ending a streak of four consecutive monthly declines.
The Central Reserve Bank of Peru‘s interest rate was left unchanged by monetary authorities at 4.50%. There had previously this year been a pair of 25-basis point cuts in January and then May. This followed 175 basis points of easing during 2024 and reduced the key rate by a total of 225 basis points from the peak of 7.75% between January and September of 2023. While Peruvian CPI inflation of 1.7% in the last two reported months was in a comfort zone, officials warn that
The outlook for global economic activity has deteriorated due the restrictive measures on international trade, with a downward bias given the high uncertainty about its effects on the global economy. In this context, financial market volatility is still prevailing.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Reserve Bank of Peru, Chinese retail sales and industrial production, Japanese GDP, Putin-Trump summit, U.S. import prices, U.S. retail sales and industrial production
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