New Overnight Developments Abroad: Merry Christmas

December 25, 2008

Japan was one of only a few open markets. The Nikkei advanced 1.0%, Japan’s yield curve flattened, and ten-year JGB yields firmed a basis point to 1.215%.

Christmas 2008 finds the dollar higher than on Christmas 2007 by 34.5% against sterling, 27.6% against the Australian dollar, and 23.5% against the Canadian dollar but down from a year ago by 20.8% against the yen and 7.1% versus the Swiss franc. The most stable major dollar relationship has been against the euro, where the dollar is up 2.8% on balance.

Compared to Christmas Eve closing levels, the dollar has risen 0.3% against the Canadian dollar, 0.2% against sterling and 0.1% against the Swissy and euro. The buck is unchanged against the yen and and Aussie dollar, and it slid 0.2% versus the kiwi.

Stocks rose 1.3% in Thailand but fell in China (-0.9%), Taiwan, and Vietnam. Russian share prices slumped 2.5%.

Oil is trading at $35.58 per barrel after slumping 9.3% on Wednesday. Gold is firmer at $848 per ounce.

Four pieces of Japanese economic data were released:

  • November housing starts were unchanged y/y after posting on-year gains of 53.6% in August, 54.2% in September and 19.8% in October. Housing starts had dropped 27% between November 2006 and November 2007.
  • Construction orders fell 12.5% in the year to November, the greatest 12-month drop since last May. Such had risen 47.2% in the year to October.
  • Fiscal 2007 through March 2008 saw Japan’s savings rate drop to a record low of 2.2% from 4.0% in fiscal 2006 on weaker income growth and higher taxes.
  • Corporate service prices slid 0.3% in November, spearheaded by a 2.1% drop in transportation which had also declined by 5.3% in October. The CSP index fell 1.9% year-on-year after -1.4% in the year to October and a rise of 1.4% in the year to August. The CSP last increased on month in May.

Bank of Japan minutes from the November 20-21st meeting also were released. That meeting voted 8-0 to keep the 0.3% overnight money target. The target was lowered by 20 basis points each on October 31st and last Friday. BOJ policymaker Kamezaki spoke today of possible extraordinary measures in the future to affect long-term interest rates and corporate financing conditions.

Vietnam’s currency, the dong, remained under selling pressure following a mini-devaluation.

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