New Developments Abroad

June 5, 2008

The dollar jumped 2.0% against the kiwi after the RBNZ governor said New Zealand’s central bank rate likely will fall later in 2008. The dollar also rose 0.8% against the yen and Swissy, 0.5% against the Australian dollar, 0.4% against sterling, 0.3% against the euro and 0.2% against the Canadian dollar. Bernanke’s verbal intervention is working so far.

The Nikkei and Chinese CSI 300 fell by 0.7% and 1.0%. The Dax rose 0.4%, while the Ftse has edged up 0.1%. The yield on 10-year JGB’s dipped 2.5 bps to 1.755%.

Oil recovered 0.5% to $122.89/bbl, helped by a refinery explosion in Kuwait. Gold lost 0.9% to $875.90 per ounce.

Central bank rate decisions are in the spotlight. Monthly announcements due at the Bank of England at 11:00 GMT and at the ECB at 11:45 GMT. Earlier today, the Reserve Bank of New Zealand held its rate steady at 8.25% but signaled a likely cut later in 2008. Rate hikes of 25 bps were announced in Indonesia to 8.5% and the Philippines to 5.25%. Brazil’s Selic rate was lifted by 50 bps to 12.25%. Malaysia kept its benchmark rate unchanged, which is what both the ECB and Bank of England are expected to do.

Britain’s Halifax house price index slumped 2.4% m/m in May, twice as much as forecast, and posted an on-year drop in March-May of 3.8%.

Dutch consumer price inflation accelerated to 2.3% y/y in May from 2.0% in April.

German industrial orders fell 1.8% m/m in April. A 0.5% increase was anticipated. Orders still rose 4.3% y/y in March-April. Foreign orders fell 3.8% and were 4.3% lower in April than their 1Q mean level. Domestic orders firmed 0.3% m/m and were just 0.2% lower in April than the 1Q level.

China’s current account surplus widened 48.8% to $371.8 billion in 2007.

Spanish industrial output fell 0.2% y/y in April. French mainland unemployment fell to 7.2% in 1Q08, lowest in 25 years.

South African economic confidence dropped to a 5-1/2 year low in May.

Australia’s goods and services trade deficit narrowed to A$ 957 million in April from A$ 2.55 bln in March and A$ 1.15 bln in April 2007. Surpluses for the first time since March 2002 are likely soon on higher prices for coal and iron exports.

Stock and bond transactions generated a Y 400 bln inflow in the final week of May.

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