The Dollar is Mixed Despite Robust US Data

The Dollar is Mixed Despite Robust US Data

12 Apr 2019

The dollar is mixed against the majors. The euro is surging against the greenback while the yen is slumping. US yields are breaking out following Thursday’s stronger than expected data which include 50-record low claims and strong wholesale prices. The Nikkei rose 0.7%, the Shanghai Composite was flat.  European shares are higher and US futures are pointing to a higher open.  10-year UST yields are up 4 basis points at 2.54. Commodity prices are mostly higher, with crude oil up 1.5%, copper up 2%, and gold up 0.1%.

Chinese Reports Strong March Trade Data

China reported strong March exports.  Exports increased 14.2% year over year compared to expectations they would increase by 6.5%. New yuan loans surged 1.69 trillion yuan while aggregate financing jumped 2.9 trillion.  Import data was disappointing, coming in at -7.6% year over year compared to a 0.2% expectatinos. 

The dollar has been unable to gain ground despite better than expected US data released on Thursday.  The US Labor Department reported unemployment benefits dropped to a 50-year low last week, pointing to sustained labor market strength. Initial claims dropped 8K to 196K for the week ended April 6, which was the lowest level since early October 1969.  Expectations were for claims to rise to to 211k  in the latest week.

Producer Prices Rise

US PPI index increased by 0.6% in March, driven by strong gains in gasoline. That was the largest increase since last October.  PPI increased by 2.2% year over year after rising by 1.9% in February. Expectations were that  PPI would climb 0.3% in March and increase 1.9% year over year. Core PPI, which excludes food and energy was unchanged last month after ticking up 0.1% in February. Core PPI increased 2.0% in the 12 months through March.

The prospects do not look good for Fed nominee Herman Cain. Press reports that four Republican Senators will oppose his nomination to the Fed’s Board of Governors.  If the Democrats are united in opposing Cain and are joined by these four Republicans, then Cain would not be confirmed. 

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