Sterling Continues to Stumble on Hard Brexit Fears
Sterling hit new 2018 lows of EUR 0.9019 and $1.2859. The dollar is 0.6% stronger against the pound than its Tuesday closing level. The dollar is also up 0.3% versus the loonie, down 0.3% relative to the yen, and barely changed against the euro, Swiss franc, Aussie dollar or kiwi.
Asian stocks were mixed Wednesday, with share prices dropping 1.3% in China, 0.4% in Singapore and 0.1% in Japan but rising 0.8% in Taiwan, 0.3% in Hong Kong and 0.6% in in India. The British Ftse is benefiting from the pound’s slide and gained 0.8% so far today. Other European markets are little changed.
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Ten-year U.S. Treasury, Japanese JGB, and German bund yields are flat, while the British gilt has dipped a basis point.
West Texas Intermediate crude oil slipped 0.6% to a sub-$69 quote of $68.75 per barrel. Gold is flat.
The published Summary of the Bank of Japan Board meeting at end-July reveals a diversity of opinions, split between members fearing the damage that prolonged quantitative stimulus is doing to the breadth of the JGB market and others worried that injecting greater flexibility into the permitted range of the JGB yield will jeopardize efforts to lift longer-term inflation expectations. The Board agreed that it will take longer to secure 2% core inflation that imagined earlier.
Several Japanese economic indicators were released:
- Bankruptcies, down 1.7% on year in July, recorded their fourth straight 12-month rate of decline.
- The seasonally adjusted current account surplus of JPY 1.76 trillion in June was 4.8% smaller than May’s surplus, and the unadjusted surplus of JPY 1.176 trillion topped the June 2017 surplus of JPY 925 billion as export growth of 9.3% was almost twice as much as the 12-month rise of imports. However, the first-half 2018 current account surplus of JPY 10.84 trillion was little changed from a surplus of JPY 10.62 trillion in the first half of 2017.
- The Economy Watchers Index fell 1.5 points to its lowest reading of 2018 in July, which was 46.6. The forward-looking outlook component also touched a low for this year.
- On-year growth in bank lending of 2.0% last month was down from 2.1% in the first half of this year.
China’s monthly trade surplus, which had spiked to a first-half high of $41.47 billion in June, settled back to a 2-month low of $28.05 billion in July as import growth accelerated.
The Bank of Thailand’s Monetary Policy Committee again decided to keep its one-day repo rate at 1.5%, the level since a pair of 25-basis point reductions in March and April 2015. There was a single dissenter as at the prior meeting on June 20, who favored a 25-basis point hike in view of the ample rate of growth being experienced in Thailand. But a released statement foresees in-target inflation and risks that need to be monitored.
The Thai economy as a whole was projected to continue to gain further traction driven by both external and domestic factors. However, there remained the need to monitor the strength of the domestic demand, inflation developments, financial stability risks in the period ahead, as well as impacts of trade protectionism measures and risks of lower-than-expected growth in the tourism sector. Hence, the Committee viewed that monetary policy should
remain accommodative.
Australian mortgage loans fell 1.1% in June, their third decline in four months.
The Filipino trade deficit widened sharply to $19.11 billion in the first half of 2018 from $11.75 billion a year earlier.
The Bank of France’s monthly business sentiment indices for July showed an unchanged reading in manufacturing but 1-point dips in services and construction. Bank officials projected a 0.4% third-quarter French GDP growth rate.
Spanish industrial output posted the smallest on-year increase in five months during June, a rise of only 0.5% compared to 12-month advances of 1.3% in May, 1.9% in April and 4.6% in March.
On-year CPI inflation in Hungary was 3.4% in June, the most since inflation moved above zero percent almost two years ago.
Canadian housing starts will be reported shortly. Central bank policy decision are due tomorrow in New Zealand, Peru, The Philippines and Serbia.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
This entry was posted on Wednesday, August 8th, 2018 at 6:12 am and is filed under New Overnight Developments Abroad - Daily Update. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
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