Some Upbeat U.S. Data Gives Pause to Speculation that Fed Might Cut Rate by as Much as Half Percentage Point in September – Currency Thoughts
Some Upbeat U.S. Data Gives Pause to Speculation that Fed Might Cut Rate by as Much as Half Percentage Point in September
August 26, 2024
A 9.9% leap in U.S. durable goods orders in July was twice analyst expectations and more than reversed June’s 6.9% retrenchment. Core non-defense orders for capital goods other than aircraft actually dipped 0.1%, however. Separately, the Dallas Fed’s monthly survey of manufacturers rose sharply to a 19-month high in August.
The U.S. data stalled the recent slide in the dollar that had depressed the weighted DXY dollar index to a 13-month low of 100.53 earlier today. Relative to pre-weekend closing levels, the dollar has recovered 0.3% against the kiwi, 0.2% versus the Aussie dollar and euro and 0.1% vis-a-vis sterling but is also down 0.3% against the loonie and 0.2% versus the yen. The Mexican peso faltered more significantly.
The price of gold rose 0.2% and with a high today of $2,563.2 per ounce is hovering just marginally under the recent all-time peak of $2570. Oil prices jumped 3.1% overnight, goosed by a halt in Libyan production and exports of oil.
The price of Bitcoin suffered a 1.7% setback this Monday.
Ten-year U.S. Treasury and Japanese JGB yields are down one basis point, whereas British gilt and German 10-year bund yields have risen 3 and 2 basis points.
In equity market action, Japan’s Nikkei closed down 0.7%, share prices rose 0.8% in Taiwan, Indonesia, and India and by 1.1% in Hong Kong. The German Dax is flat, and U.S. key indices are mixed.
The August IFO German business climate survey produced disappointing results, dropping overall for a fourth consecutive time to a 5-month low reading of 86.6. Current business conditions printed at their weakest level in 49 months, while the expected outlook slid to a 5-month low. Manufacturing and services posted clear declines, construction matched July’s 3-month low, but trade recovered slightly.
Economic sentiment in Turkey dropped 1.8 index points to a 20-month low in August. Czech business confidence fell to a 5-month low this month.
At the same time, Czech consumer sentiment hit a 6-month low, while Brazilian consumer confidence rose to a 4-month high.
Brazil’s current account deficit of $5.16 billion last month exceeded market expectations and resulted in a $$25.6 billion year-to-date shortfall, 65% wider than a year earlier.
The deceleration of Lebanese consumer price inflation continued in July, falling to 52-month low last month from 41.8% in June and a peak of 268.8% in April 2023. However, a monthly rise of 2% was the most since February.
A 0.2% year-on-year rise in Finnish producer price inflation last month a 16-month high. PPI inflation had fallen previously from 32.5% in June 2022 to -10.0% in April 2023.
Industrial production in Singapore rebounded 10.1% in July and was 2.8% greater than a year earlier.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German IFO Business climate index, U.S. durable goods orders
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