New Developments Abroad: Dollar Soars, Chinese Equities Fall 4.7%

August 8, 2008

Overnight dollar gains amount to 1.7% against the kiwi, 1.5% against the Australian dollar, 1.2% against the Swissy and euro, 1.1% against sterling, 0.6% against the C-dollar and 0.6% against the yen.  EUR/USD sunk to lowest level since February. A$ dipped under 90 cents, kiwi under 70 cents. Sterling dipped under $1.93 for the first time since March 2007 and got as low as $1.9217.  The Aussie dollar has experienced the most consecutive losing sessions since 1980.

Oil fell another 1.4% and was as weak ast $115.99/barrel despite revised prediction of above-average storms in the Atlantic.  Gold slid 0.7% to $872.0.

China’s CSI 300 plunged 4.7% on day Beijing Olympics open.  Chinese equities have done the worst this year of any major bourse.

The Nikkei firmed 0.3%, and the yield on 10-year JGB’s fell 4.5 basis points to a 4-month low of 1.47%.  Dax edged up 0.1%. Ftse is unchanged.

Italian real GDP fell 0.3% in 2Q08.  That’s worse than forecast and the second negative result in 3 quarters.  GDP was flat from 2Q07. Other major Ezone economies report GDP data next week.  So does Japan.

Japanese M2 rose 2.1% y/y in July, same gain as in 2Q08.  M1 fell 0.8% y/y.  Broad liquidity up 0.6% y/y.  Bank lending up 2.0% in year to July.

Japan’s Economy Watchers Index slid for a fourth straight month to 29.3, lowest since October 2001, from 29.5 in June.  Corporate bankruptcies jumped 12.9% y/y in July, the biggest on-year rise since July 2003.

German manufacturing sales slid 0.7% in June, their fifth drop in a row.  Dutch consumer prices rose 3.2% y/y in July, up from 2.6% in June.

South Korean PPI inflation accelerated in July to a 10-year high of 12.5%, heralding further upward pressure on consumer prices.

The French budget gap widened 7.5% in 1H08 from 1H07.  Swiss unemployment remained at 2.3% in July.

The British Council of Mortgage Lenders reported a 47.7% surge in home repossessions during 1H08 to the most since 1H96. The British leading economic index fell 1.0% in June and by 3.0% over the last six reported months.

Chinese car sales growth slowed to 6.8% y/y in July from 17.1% in 1H08, but the State Information Center predicts slightly stronger on-year GDP growth in 3Q of 10.2% after 10.1% in 1Q08.

An ECB survey found that bank lending standards had tightened in 2Q08 and are likely to do so again in 3Q08.  Governing Council member Wellink said there had been broad agreement not to raise rates this week despite great concern about inflation.

The South African rand fell this week against the dollar for the first time in 8 weeks.

The OECD leading economic index for the G7 fell to 97.0 from 97.4 in June, with Canada showing the sharpest decline.

Canada reports July labor market data in 5 minutes. U.S. productivity due later today.

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