CurrencyThoughts

The dollar recovered 0.4% against the yen but has fallen back 0.9% against sterling and the Aussie dollar, 1.1% against the kiwi, and 0.7% relative to the Swissy, euro and Canadian dollar.

The Dax, Cac40, and Ftse are higher by 1.4%, 1.1%, and 0.8% in Europe.  The Nikkei lost another 1.4%, but stocks closed flat in South Korea, Vietnam, Malaysia, Indonesia, and India.  Australian equities edged 0.1% lower.  Stocks in China firmed 1.3%.

The 10-year JGB yield is steady at 1.30%, while gilt and bund yields are somewhat lower.

Oil recovered 2.1%, holding above the psychological $60 level.  Gold climbed 0.6%, staying above $900.

The Bank of England decided not to make any changes of monetary policy, retaining a 0.5% Bank Rate and leaving its asset purchases total at Gbp 125 billion.  Some, including me, had thought the latter might have been raised to Gbp 150 billion.

Australia’s jobless rate rose a tenth to 5.8%, highest since October 2003 but still less than forecast.  Jobs fell 21.4K in June, about as expected.  A gauge of expected CPI inflation over the coming 12 months accelerated to 3.2% from 2.8% in June.

The Bank of Korea left its key policy rate at 2.0% as expected but pledged to retain its accommodative stance for the time being.

The G8 summit warned that it would be premature to reverse stimulus.  No formal comments were made about currencies, but a Japanese spokesperson complained that Japan does not need a yen rise now.  Japanese machine tool orders fell 73.1% in the year to June but rose 25.5% from May.

Germany reported an as-expected EUR 3.7 billion current account surplus in May, down from EUR 5.5 billion in April and EUR 8.1 billion in May 2008.  The seasonally adjusted trade surplus rose to EUR 10.3 billion from EUR 9.0 billion in April and a first-quarter average of EUR 8.2 billion per month.  Exports only firmed 0.3% after diving 44.2% at an annualized rate in the six months to April.  Imports fell 2.1% in May, continuing their sharp downtrend.  Both exports and imports were over 20% lower than in May 2008.

German consumer prices were confirmed to have risen 0.4% in June and by 0.1% from a year earlier.  In 1H09, the total CPI rose 0.9% at a seasonally adjusted rate, constrained by a 2.8% annualized decline in food.  Real manufacturing turnover in Germany sank 19% in the year to May, with drops of 14.6% in domestic turnover and 24% in the foreign component of the index.

Britain’s merchandise trade deficit narrowed from Gbp 7.137 billion in April to Gbp 6.263 billion in May, smallest since June 2006.  Export and import volumes each dropped about 4%.  The goods and services deficit in May of Gbp 2.168 billion was smaller than forecasts that such would be Gbp 2.8 billion.

Swedish consumer prices firmed 0.2% in June but fell 0.6% from June 2008.  Dutch consumer prices slid 0.3% in June, cutting the 12-month increase to 1.4% from 1.6% in May and 2.6% a year earlier.  Czech consumer prices were unchanged in June and posted a 12-month rise of 1.2%, lowest since end-2003.  Irish consumer prices slipped 0.3% last month and by 5.4% on year, but such fell just 1.6% excluding falling mortgage interest costs.

Malaysian industrial output rose 1.6% in May but dropped 11.1% from a year earlier.  Pakistani CPI inflation eased from 14.4% in May to 13.1% in June, a 16-month low.  Consumer confidence in Thailand improved with a reading of 65.4 in June after a 7-year low of 64.3 in May.

Mining production in South Africa fell 14.5% in the year to May, deeper than the 10.6% on-year drop in April.

Hungary’s January-May trade surplus of EUR 1.53 billion was 5.1 times wider than a year earlier.

Central banks in the Philippines, Chile, Colombia, and Peru will announces interest rate decisions later today.  Scheduled U.S. data include wholesale inventories and weekly jobless claims.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

The Nikkei lost 2.4%. Stocks also fell another 2.8% in India, 1.3% in Thailand, 0.7% in Taiwan, 1.0% in Pakistan, 0.6% in Singapore, 0.4% in the Philippines, and 0.8% in Hong Kong.  The German Dax and British Ftse have edged 0.1% and 0.2% higher.

The yen hit six-week highs of 130.42 per euro and 94.08 per dollar.  The dollar is 0.5% lower against the yen but unchanged against the Swissy and euro.  The buck rose 0.3% against sterling, 0.4% against the Australian dollar, 0.2% against the kiwi, but is 0.1% softer against the Canadian dollar.

Sovereign debt yields are lower in Europe and Japan.  The 10-year JGB touched 1.285%, lowest since March 25th.

Oil eased another 0.8% to $62.43 per barrel.  Gold is also off 0.8% at $921.70 per ounce, and this has weighed on the South African rand, which hit a 2-week low against the dollar.

Japanese core domestic machinery orders unexpectedly fell 3.0% in May on top of a 5.4% drop in April, and such posted a 38.3% decline from May 2008.  Foreign orders sank 13.3%.

Japan’s current account surplus in May was 34.3% smaller than a year earlier.  Goods exports dropped 42.2%, even more sharply than the 40.6% decrease in the year to April.  The seasonally adjusted surplus widened 5.1% between April and May, as exports recovered 1.9%.  The trade balance swung to a Y 274 billion surplus in June 1-20 from a deficit of Y 247 billion a year before.

On-year growth in Japanese M2 of 2.7%, M3 of 1.7%, and bank lending of 2.5% during June were each lower than in May and less than forecast.  Japanese corporate bankruptcies were 7.4% higher in June than a year earlier.

Australian data released today corroborated the central bank’s upbeat statement yesterday.  Consumer confidence scored its greatest monthly advance in 22 years last month.  Home loan approvals increased 2.2% in May on top of a 1.8% advance in April.

German industrial production jumped 3.7% in May, the biggest monthly increase since August 1993, but was still 18.1% lower than in May 2008.  Output in April was revised to a drop of 2.6% from minus 1.9% reported a month ago.  Production of capital goods (up 8.3%) and intermediate goods (+4.3%) led the gains in May.  German corporate insolvencies increased 7.1% in the year to April, less than the gain in 1Q09.

Revised Euroland GDP figures for 1Q09 showed an unchanged quarterly drop of 2.5% but a slightly steeper 4.9% decline from 1Q08.  In the year to 1Q09, GDP fell by 6.9% in Germany, 6.0% in Italy and Finland, 8.4% in Ireland, 4.5% in the Netherlands, 3.7% in Portugal, and 3.0% in Spain.

The Bank of France revised its projected GDP drop for 2Q09 to minus 0.4% from minus 0.5%.  The central bank reported a fourth straight rise in French industrial confidence to an as-expected reading of 84 from 81 in May, 75 in April, 74 in March 72 in both January and February and a cyclical low of 68 in December.  Business sentiment in service-sector industries also rose to 78 in June from 77 in May and a recent low of 76 in April.

Turkish industrial output rose 65.5% in May but fell 17.4% from May 2008.

Swiss unemployment rose to 3.8% in June, highest since August 2005, from 3.5% seasonally adjusted in May.

Swedish industrial output fell 2.7% in May and by 21.9% on year, while orders sank 30.1% from a year earlier despite a 3.8% monthly advance.  Sweden’s activity index worsened to minus 0.05 in May from plus 0.11 in April.

The British Halifax home price index unexpectedly fell 0.5% in June but recorded a smaller 12-month drop of 15.0% after declining 16.3% in the year to May.  The NIESR Institute estimates that British GDP fell 0.4% in June on top of a 1.3% drop in May.  The British Retail Consortium said shop prices dropped by 0.7% in the year to June, led by a 1.9% decline in non-food stores.  The Nationwide gauge of British consumer confidence improved to 58 in June from 54 in May and was almost as high as the 59 reading in June 2008.

Romanian real retail sales fell 12.3% in the year to May despite a 0.2% monthly uptick.

Russian President Medvedev again called for modifications in the international monetary system away from reliance on the dollar.

India’s trade minister said exports fell sharply in June.

Brazil’s IGP price index slid 0.32% in June, somewhat more than expected.

U.S. consumer credit data are due today.  Many central bank rate announcements are on tap for tomorrow.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

Sterling weakness persists.  Pound off 0.6% against euro and dollar.  Dollar movements small otherwise: up 0.2% against the kiwi and Swissy, up 0.1% versus the yen, down 0.1% versus the Aussie dollar and Canadian dollar, and unchanged against the euro.

Asian stocks closed mostly lower, with drops of 1.0% in China, 1.5% in Vietnam, 0.7% in Hong Kong, 0.4% in Australian, and 0.3% in Japan and Sri Lanka.  European bourses trading higher, however, with gains 0f 0.8% in France and Germany and 1.0% in Britain.

Ten-year gilt, bund and Treasury yields are firmer, while the 10-year JGB is flat at 1.32%.

Oil advanced 0.5% to $64.39/barrel, and gold firmed 0.1% to $925.60 per ounce.

German industrial orders shot up 4.4% in May, most in 23 months but were still 28.8% lower than in May 2008.  A 3.8% gain in April/May from 1Q follows drops of 17.0% in 4Q08 and 14.4% in the first quarter of 2009.  Analysts had expected orders to recover just 0.5%.  Both domestic demand (+3.9%) and export orders (+5.2%) rose sharply.  Domestic orders for capital goods, a gauge of future business investment spending, increased 6.5%.  Germany’s finance minister nevertheless cautioned that global economic turmoil will persist for quite a few more months, and Ordonez of the European Central Bank warned that officials must be alert to the risks of deflation.

Unrest in Xinjiang, China, where over 150 have died, appears to be spreading.

The Reserve Bank of Australia left its policy cash rate unchanged at 3.0% after its monthly meeting as analysts had expected, but officials left the door open for more monetary easing if that proves necessary.  Inflation is expected to fall further in coming months, due to slacker plant capacity usage and labor markets.  A released statement was more upbeat about Australian and global growth prospects, claiming that Australian growth had not developed as weakly as officials had anticipated a few months ago.

Australia’s construction index fell 4.3 points in June to 42.6.  New Zealand, where the central bank is not expected to change rates at its July 30th policy meeting, reported improved but still negative business sentiment.  Such was minus 25% in the second quarter after -65% in 1Q09.

British industrial production was considerably weaker than expected in May, dropping 0.6% on month and by 11.9% from May 2008.  Industrial production in the three months to May fell 1.8% below the level of the three months to February and 12.3% from a year earlier.  Factory output dropped 0.5% in May and 12.7% from May 2008.

The British Chamber of Commerce released results from its 2Q economic survey.  Manufacturers showed a greater improvement than service sectors but trailed the latter in absolute terms.  Domestic sales printed at -37 after -55 in the first quarter in manufacturing and at -16 after -23 in services.

Norwegian industrial output sank 3.1% in May and by 7.8% from a year earlier.  Both declines were larger than those in April.

France reported a EUR 2.718 billion trade deficit for May, 29.2% narrower than in April.

Russian consumer price increases in 1H09 accrued to 7.4%, down from 8.7% in the first half of 2008, but June’s 0.6% monthly increase exceeded expectations.

Consumer prices in June also rose 0.6% in the Philippines, halving the 12-month pace from 3.3% in May to 1.5%, smallest since April 1987.  Taiwan’s trade surplus of $1.76 billion in June was smaller than forecast.  Compared to June 2008, imports dropped 33.5%, more than the 30.4% decline of exports.

The Czech trade surplus of CZK 11.71 billion in May was 2% smaller than in April but 20.3% larger than posted in May 2008.  Hungarian industrial production firmed 2.6% in May but was 22.1% less than a year earlier.  April had seen an on-year output drop of 25.3%.

Canada, which yesterday projected budget deficits through fiscal 2014, releases its IVEY-PMI figures and building permits later today.  There are no significant monthly U.S. data due today.  G-8 leaders are beginning to assemble in Italy, where the annual summit begins tomorrow.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.