The Dollar Continues to Rebound Buoying European Shares

European stock markets moved broadly higher as USD strengthened. Asian markets still closed mixed, but the Hang Seng was up 0.47% in the end as tech stocks rebounded and investors looked ahead to U.S. tax reform plans. The Nikkei meanwhile was dragged down by companies trading ex-dividend. In Europe, the DAX benefited from ongoing EUR weakness as well as mergers as Siemens AG and France’s Alstom SA agreed to combine their rail divisions in a EUR 7.4 billion deal, in an attempt to fight off competition from China. Spain’s IBEX is outperforming with a gain of more than 1% as investors started to feel that concerns over Catalonia’s bid for independence, which weighed on the index over the past week, were overdone. U.S. stock futures meanwhile are higher and oil prices are slightly down on the day.

Oil prices are softer today, with the WTI futures benchmark showing a modest decline extending a correction from yesterday’s five-month peak at $52.43. Weekly API data showed U.S. inventories of crude to have fallen by 761,000 barrels, with hurricane-affected refineries upping production demand. Crude prices would have likely corrected by a greater extent were it not for news that Turkey is threatening to cut a pipeline that carries 500k-600k barrels per day of crude from northern Iraq to Turkey in retaliation for an independence referendum in Iraqi Kurdistan.

Eurozone Money Supply Picked Up

Eurozone money supply growth accelerated to 5.0% year over year in August, from 4.5% year over year in the previous month, more than anticipated. Loan growth picked up with loans to non-financial corporations rising 1.4% year over year, up from 1.2% year over year in July. The growth rate of loans to households accelerated to 3.1% year over year from 2.9% year over year, as loans for house purchases jumped 3.4% year over year, after rising 3.1% year over year in July. Consumer credit growth meanwhile remained steady at 6.7% year over year. Loans for house purchases saw a sharp rise over the month, which will add to concerns of bubbles in the housing market as the period of easy money continues.

Italian economic confidence jumps higher in September, with the overall reading rising to 108.0 from 107.1 and manufacturing, construction and retailing sentiment all improving markedly. Services sentiment remained steady over the month. The data means a further improvement in sentiment in Q3 compared to the second quarter, which keeps the Italian recovery on course for further expansion.