New Overnight Developments Abroad: Dollar Ending May Significantly Lower

May 29, 2009

Stocks rose and the dollar fell as several better-than-expected economic indicators cheered investors that the global recovery may be winding down.

  • Japanese industrial production shot up 5.2% in April, most in 56 years, and is projected to gain 8.8% in May, 2.7% in June, and 9.8% in the second quarter.
  • Japanese factory PMI improved to 46.6 in May from 41.4 in April, 33.8 in March, 31.6 in February and 29.6 in January.
  • German retail sales volume rose unexpectedly in April, a gain of 0.5% and its first advance in four months.
  • Indian real GDP climbed 5.8% in the year to 1Q, same as in 4Q08.
  • South Korean industrial output jumped 2.6% in April on top of a 4.9% rise in March.  The factory PMI also improved.
  • The British Nationwide house price index increased 1.2% in May, trimming its 12-month drop to 11.3% from 15.0% in April.
  • M1 on-year growth in Euroland accelerated to 8.4% in April from 5.9% in March, suggesting monetary stimulus may be working.
  • Polish real GDP grew 0.8% in the year to 1Q, avoiding negative territory albeit down from 2.9% in 4Q.
  • Quarterly GDP contraction slowed in Sweden to -0.9% in 1Q from -5.0% in 4Q.

The dollar recorded overnight losses of 1.9% against the kiwi, 1.6% against the Australian dollar, 1.3% against sterling, 1.2% against the euro and Canadian dollar, and 1.1% relative to the yen and Swiss franc.  I believe that’s the first day in 2009 that the greenback has fallen over 1.0% against that entire set of rivals by this point in the morning.  The dollar also lost substantial ground against the Nigerian naira on the black market and the South African rand.

Oil climbed another 1.3% to $65.91 per barrel and shows a 29% rise for the month.  OPEC did not change production after oil ministers met yesterday.

Gold is up 1.2% to $974.90 per ounce, continuing its grind toward $1000.

Sovereign debt yields are lower in Europe and the U.S. but unchanged in Japan.

Euroland M3 (up 4.9% in April) did not decelerate as much as forecast, but loans to the private sector slumped to 2.4% y/y from 3.2%.

Japanese unemployment rose to a 5-1/2 year high of 5.0% in April from 4.8% in March and 4.1% in January.  The job offers ratio sank to 0.46, its cyclical low of mid-1999, and employment was 1.7% lower than a year ago.  Real household spending was weaker than expected in April, falling by 0.9% from March and by 1.3% from a year ago.  Consumer prices in April posted on-year drops of 0.1% for all items and for non-food index and 0.4% for the non-food and energy index.  Tokyo consumer prices (total and core) through May show an annualized year-to-date drop of more than 2.0%.  Housing starts and construction orders posted on-year drops in April of 32.4% and 25.9%, worse than expected.

In Australia, private credit grew 0.1% in April and by 4.6% from April 2008.  Mortgage loans went up 7.1% y/y.

South Korea‘s PSI indices improved to their best levels since early autumn.

The Flash indication for CPI inflation in Euroland showed a 12-month rate of zero in May, down from +0.6% in April.

Switzerland’s index of leading economic indicators held steady at -1.86 in May. In May 2008, such has printed at +1.13.

Thai exports and imports recorded on-year drops in April of 25.2% and 36.1%.

Italian consumer price inflation hit a 41-year low.  The harmonized CPI edged up 0.2% m/m and only 0.8% from May 2008.  The PPI sank 0.4% in April and 4.6% from a year earlier.

Euribor rates closed May with a downtick.

British consumer confidence held steady in May with a reading of minus 27, still a 10-point improvement from minus 37 in January.

At 12:30 GMT, the U.S. reports revised 1Q GDP, and Canada releases its quarterly current account figures.  Later in the morning we get the mid-western PMI reports from Chicago and Milwaukee as well as the U. Michigan index of consumer sentiment.

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

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