Stocks and Commodities Up, Dollar Softer Ahead of Powell’s Speech at Jackson Hole – Currency Thoughts
Stocks and Commodities Up, Dollar Softer Ahead of Powell’s Speech at Jackson Hole
August 23, 2024
The attention of investors around the world is focused on Jackson Hole, where Fed Chairman Powell is about to speak. Investors attach three times more likelihood that September sees a 25-basis point rate cut rather than a 50-basis point move, but are unsure of what happens after that. Earlier overnight, Bank of Japan Governor Ueda said a further retreat from that bank’s ultra loose stance would occur if inflation continues to run above target.
The weighted DXY dollar index got as low as 101.26 overnight, 4.5% down from its late June high. The dollar fell overnight by 0.5% against the kiwi, 0.3% relative to the Canadian and Australian dollars, and 0.2% versus sterling but is holding steady relative to the euro.
Stock markets today rose 0.4% in Japan, 0.5% in New Zealand, and so far by 0.3-0.8% in major European centers. The Nasdaq and DOW are up around a half percent, but the SPX is lower. Ten-year U.S. and British sovereign debt yields are down two and one basis points, while their Japanese counterpart climbed 3 bps following the BOJ’s comments.
Prices for WTI oil and Comex gold have risen 1.6% and 0.9%. Bitcoin is 1.0% higher so far today and 13% above its August 5th low.
Kamala Harris‘ speech last night depicted her as a defender of the middle class and a forward-looking leader in contrast to the Republicans’ quest to turn back the clock on domestic and foreign policies. The Democratic Party members have found fresh hope in her nomination, but it remains to be seen whether that enthusiasm is sustained and translated into more voters going to the polls.
Overall Japanese CPI inflation of 2.8% last month was again well above target and matched the May and June results. Core inflation, which excludes perishable food, rose 0.5% on month and accelerated to a 5-month on-year high of 2.7%. Excluding energy as well as food, however, inflation slowed to 1.9%.
Icelandic producer price inflation jumped 1.5 percentage points to a 17-month high of +6.2% in July. Between April 2022 and April 2023, such had swung from +29.6% to -7.0%.
Consumer price inflation in Singapore held steady in July at June’s 34-month low of 2.4%, and core inflation decelerated to a 29-month low of 2.5%.
A July measure of expected consumer price inflation in the euro area over the coming 12 months printed at 2.8% for a third straight month. In May that result had represented a 30-month low.
British consumer confidence this month matched July’s 33-month high but failed to improve further as analysts had been anticipating.
French business confidence, which had plunged from 99.1 in June to a 41-month low of 93.9 in July, recovered partly this month to 96.6 but remained below the long-term average score of 100. Confidence in manufacturing and construction recovered more fully than in services.
Buoyed by lower mortgage rates, U.S. new home sales shot up to a 14-month high of 739 thousand in July from 668k in June and 621k in May. That was the steepest monthly advance in 23 months.
Over the 12 months ending in July, Taiwanese retail sales and industrial production respectively rose by 3.4% and 12.3%. New Zealand retail sales, in contrast, dropped 3.6% between the second quarters of 2023 and 2024.
The first press reports on Fed Chairman Powell’s Jackson Hole address depict a dovish message in which he left no doubt that rates will be reduced next month and expressed concern about the recent weakening of labor market data. U.S. equities have rallied further in response.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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