US Building Permits Drop to 10-Month Low in July
Building permits in the US, a proxy for future construction, decreased 1.3% to an annualized rate of 1.674 million in July of 2022, the lowest level since September last year, compared to forecasts of 1.65 million. Single-family authorizations dropped 4.3 percent to 928 thousand units, while approvals of units in buildings with five units or more rose 2.5 percent to 693 thousand. Building permits declined in the West (-12 percent) and the South (-0.1 percent) but increased in the Northeast (9.3 percent) and Midwest (8.1 percent).
Canada Inflation Rate Eases to 7.6% in July
Canada’s annual inflation rate was at 7.6% in July of 2022, easing from the 39-year high of 8.1% hit in the prior month and in line with market estimates. Transportation costs grew at a much slower pace (14.4% vs 16.8% in June), amid a sharp retreat in gasoline (35.6% vs 54.6%). Also, inflation was lower for shelter (7% vs 7.1%), household operations, furnishings, and equipment (5% vs 5.6%), and clothing and footwear (1.4% vs 2.7%). In the meantime, inflation continued to pick up for food (9.2% vs 8.8%), weighed by groceries (9.9% vs 9.4%), while recreation costs stagnated (at 6.2%). Excluding gasoline, the CPI rose by 6.6% annually. On a monthly basis, consumer prices edged 0.1% higher, the slowest rise since December 2021.
Pakistani Rupee Rallies to 1-Month High
The Pakistani rupee touched a one-month high of 213 per USD in August rebounding further from an all-time low of 240 hit in July, following IMF statements that the country had met the final prerequisite for the release of $1.1 billion of the bailout fund, increasing the petroleum development levy. Pakistan revised the prices of petroleum products on Monday, with effect from August 16, 2022, with petrol increasing by Rs6.72 ($0.031) per liter to Rs233.9 ($1.09), from Rs227.19 ($227.19). Pakistan’s Finance Division stated that in the wake of fluctuations in petroleum prices in the international market, and exchange rate variation, the government decided to revise the existing prices of petroleum products to pass on the impact to the consumers. Still, the currency is likely to see more downward pressure as political turmoil continues and as the US dollar and commodities remain high, weighing on the country's reserves and threatening the external position and public financing conditions.
Canada Housing Starts Unexpectedly Rise
Housing starts in Canada increased by 1.1 percent over a month earlier to 275,329 units in July of 2022, above market expectations of 262,100 units, according to the Canada Mortgage and Housing Corporation (CHMC). Urban starts decreased by 0.8 percent to 254,371 units, as single-detached urban starts fell 2.3 percent to 58,384 units and multi-unit urban starts went down 0.3 percent to 195,987 units. Rural starts were estimated at a seasonally adjusted annual rate of 20,958 units.
Brent Crude Struggles for Direction
Brent crude futures swung between small gains and losses at aorund $95 per barrel on Tuesday, after falling more than 5% in the previous two sessions and remaining close to levels not seen since February on concerns that a global downturn could heavily impact energy demand. China’s factory and retail activity slowed unexpectedly in July, prompting the central bank to cut key lending rates to shore up demand. In the US, the New York Empire State Manufacturing Index posted its second largest monthly decline ever in August. The prospect of increased Iranian oil exports also weighed on prices as Iran responded to the EU’s proposal for reviving the 2015 nuclear deal, calling on the US to show a “realistic approach and flexibility” to resolve three remaining issues. Elsewhere, Saudi Aramco head Amin Nasser said Sunday that the state-owned firm stands ready to raise crude output to its maximum capacity of 12 million barrels a day if the Saudi Arabian government orders it to do so.
Oil Fluctuates at Around 6-Month Lows
WTI crude futures fluctuated between small gains and losses at around $90 per barrel on Tuesday, after falling more than 5% in the previous two sessions and remaining close to levels not seen since February on concerns that a global downturn could heavily impact energy demand. China’s factory and retail activity slowed unexpectedly in July, prompting the central bank to cut key lending rates to shore up demand. In the US, the New York Empire State Manufacturing Index posted its second largest monthly decline ever in August. The prospect of increased Iranian oil exports also weighed on prices as Iran responded to the EU’s proposal for reviving the 2015 nuclear deal, calling on the US to show a “realistic approach and flexibility” to resolve three remaining issues. Elsewhere, Saudi Aramco head Amin Nasser said Sunday that the state-owned firm stands ready to raise crude output to its maximum capacity of 12 million barrels a day if the Saudi Arabian government orders it to do so.
Irish Trade Surplus Narrows for 1st Time in 5 Months
Ireland’s trade surplus narrowed slightly to EUR 4.8 billion in June of 2022 from EUR 4.9 billion in the corresponding period of the previous year. Exports rose by 19 percent to EUR 17.5 billion, supported by medical and pharmaceutical products (14 percent to EUR 6.4 billion), professional, scientific, and controlling apparatus (51 percent to EUR 0.9 billion), and food and live animals (21 percent to EUR 1.4 billion). Sales to Great Britain rose by 38 percent to EUR 1.9 billion, while those to the EU rose by 11 percent to EUR 0.6 billion. Meanwhile, imports rose by 28 percent to EUR 12.7 billion, amid sharp increases for organic chemicals (46 percent to EUR 0.8 billion) and mineral fuels, lubricants, and related products (108 percent to EUR 1 billion). Purchases from Great Britain surged by 54 percent to EUR 2.2 billion, while those from other EU countries fell by 0.6 percent to EUR 3.7 billion.
Japanese Yen Depreciates From 1-Month High
The Japanese yen weakened past 134 against the dollar, falling further away from a 1-month high of 130.4 hit on August 2nd, as investors sought shelter in the greenback after disappointing Chinese and US data renewed fears of a global recession. Domestically, the latest data showed the Japanese economy expanded 0.5% in the second quarter of the year, below market expectations of a 0.6% advance. Also, Japan’s GDP grew by 2.2% on an annualized basis, compared with market estimates of a 2.5% growth. On the monetary policy front, the Bank of Japan maintained ultra-low interest rates at its July meeting at a time other major central banks are racing ahead with aggressive rate hikes to curb surging inflation. For the Bank of Japan, inflation is sustainable and not a priority, because despite being just above the 2% target, it is still low compared to other major economies.
Cotton Climbs to Over 7-Week High
Cotton futures rose above 120 USd/Lbs, the highest in over 7 weeks, as traders balanced prospects of lower production against lower demand. The latest USDA crop report showed production for 2022-23 down at 12.6 million bales, which would be the lowest level since 2009-10. The new production forecast is also about 19% lower than 2021-22. Meanwhile, cotton crops in India, another top producer, remain under threat due to adverse weather conditions and pest attacks in major growing regions.
Euro Weakens Further as Recession Looms
The Euro depreciated to below $1.015, moving closer to the key $1 dollar parity level after more data pointed to an economic downturn in the European region. The latest figures showed German investor morale fell unexpectedly to -55.3 in August, the lowest since October 2008. The common currency is trading close to parity since early July, on mounting worries that the Euro Area economy is heading into a recession, while inflation continues to break record highs along with energy prices, and the ECB is set to continue to increase borrowing costs. Germany must cut its gas use by a fifth to avoid a crippling shortage this winter, its top network regulator said, and the country is getting close to reaching the third stage of an emergency plan that includes rationing of gas to industries. Meanwhile, the ECB is still seen raising rates by 50 bps in September.