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THE DAILY MACRO BRIEF: Dollar plunge, PhillyFed Index, Inflation, Gold, Bond market...

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07/19/2019 | 07:38am EDT

The dollar was heckled yesterday, due to the speech by the Fed President of New York. The Philadelphia Fed Manufacturing Index is at nine-month highs. In Japan, inflation is back to its lowest level in two years. Prices for yellow metal and black gold are volatile. In Italy, bond yields are falling.

A speech that made the dollar plunge. New York Fed President John Williams said yesterday in a speech to the Annual Meeting of the Central Bank Research Association (CEBRA) that it was essential to "act quickly when economic conditions are unfavorable" and that it was necessary to "keep interest rates low for longer". He believes that in this context of slowing growth, policy-makers must make the best possible use of the tools at their disposal to achieve their price stability objectives. His intervention had the effect of dropping the greenback, as traders interpreted his remarks as a hope that the Fed would cut its rates by 50 basis points at the end of July. The New York Fed then issued a press release to calm things down, explaining that Williams' comments "did not concern possible monetary policy decisions that will be taken at the next FOMC meeting". The dollar then recovered.
Source: Bloomberg, 19/07/2019

Manufacturing activity is leaping in the US. According to the Philadelphia Fed survey, the manufacturing index fell from 0.3 points in June to 21.8 points in July, returning to October 2018 levels.

Still no inflation in Japan. The Japanese consumer price index rose by 0.6% in June (at an annual rate), the lowest since August 2017.

The price of gold. Due to persistent tensions with China, or even Tehran, the gold ounce reached USD 1453, a high since 2013, while the black gold has, for its part, chained 6 consecutive sessions in the red.

Italy and the bond market. Matteo Salvini mentioned yesterday the early elections in the autumn. The League's leader, and Luigi Di Maio, Vice President of the Italian Council, are scheduled to meet soon to defuse the crisis within the coalition. Italian yields are falling, especially as the ECB plans to adjust its inflation target.

Romain Fournier
© MarketScreener.com 2019
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