New Developments Abroad

June 25, 2008

The dollar has edged 0.1% lower against sterling, the euro, and Swissy.  It is off 0.2% against the A-dollar but up 0.1% against the yen and kiwi. C-dollar is flat.

Markets await the FOMC decision around 18:15 GMT today.  An unchanged 2.0% fed funds rate is expected.  Focus will be on statement for any sign of when rates might be raised in the future.  U.S. durable goods orders, new home sales, and weekly oil inventories are due at 12:30 GMT, 14:00 GMT, and 14:30 GMT.

In Asia, China’s CSI-300 jumped 4.1%, but the Nikkei-225 slid by 0.1%.  European stocks are higher: Dax +0.5%. Cac40 +1.0%, and Ftse +0.5%.

In contrast to somewhat higher bond yields in Europe and the U.S., the 10-year JGB yield retreated by a further 4.5 basis points to 1.66%.

Oil is little changed at $136.91/barrel, and gold prices eased 0.3% to $889.30/ounce.

Industrial orders expanded 2.5% m/m in April.  Although the rise far exceeded expectations, it was concentrated in advances of 5.2% in France and 4.4% in Italy.  Orders fell in Germany, Spain, Portugal, and Ireland.  Total orders rose 11.7% from April 2007.

In testimony to the EU parliament, Trichet stuck to his message of his June 5th press conference and subsequent comments that a rate hike in July appears likely but that doing such did not necessarily imply additional moves afterward. Other ECB officials made public comments consistent with this view.

CPI inflation in South Africa accelerated to 10.9% in May from 10.4% in April and 5.4% a year earlier.  Food (+17.0%) is largely to blame for the increase.

Retail sales in Italy were unchanged m/m in April and off 2.3% y/y.

Japan’s customs trade surplus fell 7.6% y/y to Y 366 bln in May, a smaller drop than anticipated.  Exports and Imports posted on-year growth of 3.7% and 4.4%.  Real exports went up 7.5%, while real imports fell by 6.4% compared to May 2007.  Corporate service prices increased 0.2% in May despite a seasonal 4.1% decline in advertising costs.  On-year CSP inflation was at 0.6% last month, within a range of 0.4-0.7% since the start of this year.

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