The dollar has lost 0.4% against the Canadian dollar, 0.3% versus the euro and Swiss franc, and 0.1% relative to the Aussie dollar. On the other hand, the greenback shows gains of 0.4% against sterling, 0.3% against the kiwi, and 0.2% versus the yen.
Stocks have performed well, rising 2.5% in India, 1.7% in the Philippines, 1.4% in Thailand and Germany, 1.6% in Hong Kong, 1.2% in Singapore and France, 1.1% in Britain, 0.8% in South Korea, and 0.5% in Australia. Japan’s Nikkei shows no change, however.
Ten-year yields climbed significantly in Germany and modestly in the U.K., but the 10-year JGB slid back four basis points.
Commodities are firmer. Gold advanced another 1.2% to $1115.80 per ounce, while oil is 0.5% higher at $79.48 per barrel.
China released several indicators, the gist of which confirmed a return to rapid growth. Other countries want China to let the yuan rise, now that its economic slowdown is in the rearview mirror.
- The October trade surplus was 85.5% wider than September’s. Imports dropped just 6.4% from a year earlier versus a 15.2% decline in the year to September. Exports fell 13.8% on year, much more than assumed.
- Industrial production rose 16.1% in the year to October, accelerating from on-year growth of 15.5% in September and 8.2% in October 2008.
- Retail sales rose 16.2% on year, up from a 12-month rise of 15.5% in September.
- Fixed asset investment continues to expand robustly, recording a 33.1% increase from a year before in the first ten months of 2009.
- Producer price deflation narrowed to minus 5.8% in the year to October from minus 7.0% in September.
- Consumer price deflation was minus 0.5% after minus 0.8% in September.
The on-year drop in Indian exports of 11.4% in October was the smallest in ten months and just a third as much as the 33.3% drop in the year to March.
Japanese core private domestic machinery orders leaped 10.5% in September, much more than a forecast rise of 1.0%. Third-quarter orders slid just 0.9%, a much smaller drop than that of 4.9% in 2Q. Officials project a 1.0% rise in the present quarter. Foreign machinery orders shot up 25.9% in September and by 41.7% last quarter, reinforcing hope that Japan’s economy may sustain a better tone.
Australia’s leading employment index recorded an eight consecutive improvement, printing at minus 0.841 in November after minus 0.988 in October. But Aussie consumer confidence started to show the effects of rising interest rates, swinging to minus 2.5% from plus 1.7% last month. Australia has the only central bank to have raised interest rates more than once thus far. Consumer confidence was still 38.2% above year-ago readings. Moreover, commercial and personal finance posted solid gains of 5.6% and 4.1%, respectively, in August.
Britain reported the smallest increase in the claimant unemployment count in 18 months, a gain of 12.9K versus a forecast increase of 20K and a rise of 20.8K in the prior month. The claimant jobless rate of 5.1% in October was up a tenth from September and up 2.0 percentage points from a year earlier. The ILO jobless rate, which conforms to standards in other countries, was 7.8%. Average earnings, a gauge of wage inflation, posted a record low 1.2% from a year ago in the third quarter and went up just 1.0% in the year to September alone. In the private sector, average earnings grew just 0.5% in the last year.
The Bank of England released a somewhat more dovish quarterly Inflation Report than had been anticipated. At the path of market-projected future interest rates, CPI inflation would be still below the 2% target at 1.6% in two years from now. The implication is that the Bank of England will move more slowly on rate raising than the market thinks. Governor King said sub-target inflation is more likely than above-target inflation during the forecast period and added than no decision has been made on when to end quantitative easing.
Dutch industrial production rose 1.1% in September and fell by a diminished 7.6% from a year earlier. Such had dropped 9.0% in the year to August. Czech industrial output slid 11.9% in the year to September, similar to a forecast decline of 11.5%. The Czech current account deficit narrowed in September.
Portuguese consumer prices were steady last month and fell 1.5% from October 2008. Core inflation was minus 0.4%. Hungarian consumer prices were also flat in October and up 4.7% from a year earlier.
Dallas Fed President Fisher expects sub-trend growth to continue in 2010 and 2011 and called the present monetary policy stance “appropriate.” He used to be considered one of the central bank’s most hawkish policymakers.
The U.S. Treasury market will be closed today for Veterans Day. Canada observes Remembrance Day and will be shut, too.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
Dollar Weakness After Presidential Elections
November 11, 2009 · Leave a Comment
An element of the dollar’s depreciation in 2009 to bear in mind is that we are in a post-presidential election year. The dollar has taken some pretty big tumbles in such years before.
It fell 31.5% from 3.22 marks at the time of the 1972 reelection of Richard Nixon to 2.20 by early July 1973.
It ended 1977 at 2.11 marks, 12.2% weaker than when Jimmy Carter was elected in 1976 and went on to depreciate by a total of 29% by end-October 1978.
The dollar performed very well in the early 1980s, climbing 52% against the mark between the initial election of Ronald Reagan in November 1980 and his reelection four years later. Reagan switched Treasury secretaries at the start of his second term, resulting in a U-turn on dollar policy. From late February 1985 to the end of that year, the dollar lost 29.5% against the mark.
During 1989, year one of the first Bush presidency, the buck began robustly as it had done in 1985 but fell by 17% against the mark between mid-June and yearend.
The dollar fell some 20% from 126 yen on the first full day of the Clinton presidency to a low in the summer of 1993 of JPY 100.4.
The dollar has suffered in years following a presidential election under both Republicans and Democrats. It does not do this always. Notably, it rose strongly in the first halves of 1981 and 1989 and in the first two months of 1985. The one consistency is that the U.S. currency has stumbled pretty significantly early on whenever a Democrat was elected. It did so generally under Carter, specifically against the yen under Clinton, and now generally again under Obama.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
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