Overnight Developments Abroad: Awaiting Central Bank Announcements
June 4, 2009
Currency moves reflect less risk aversion, with dollar up 0.6% against the yen but down against everything else. Losses of 0.6% against the Aussie dollar, 0.4% versus the kiwi and sterling, 0.2% relative to the Canadian dollar, and just 0.1% against the euro and Swissy.
Stocks were mixed in Asia but up in Europe. Equities rose 1.1% in Indonesia, 0.9% in India and the Philippines, 0.5% in China and 3.0% in Vietnam. Equities fell 0.8% in Japan, 1.6% in Taiwan, 0.9% in Singapore, 2.6% in South Korea, 0.4% in Hong Kong, 2.1% in Australia and 0.9% in New Zealand. The German Dax, Paris Cac and British Ftse have traded 0.9%, 0.7%, and 0.3% higher.
The yield on 10-year JGBs settled back 2.5 basis points to 1.52%.
Oil rebounded 1.7% to $67.19 per barrel following Wednesday’s sharp drop. Gold firmed 0.4% to $969.00 per ounce.
The Bank of England decision is set for 11:00 GMT. Then comes the ECB at 11:45 followed by a press conference at 12:30 GMT. Finally, the Bank of Canada will reveal its decision at 13:00 GMT. None of these banks is expected to change interest rates. Peru’s central bank also meets today, as did Iceland’s.
Today marks twenty years since the Tiananmen Square massacre in Beijing.
There have already been a few surprises today.
- Iceland’s Sedlabanki implemented its fourth big rate cut in less than 3 months in defiance of IMF cautions that such a move could be destabilizing. The key Icelandic rate was slashed by 100 basis points to 12% and is 600 bps below its recent peak. Next meeting scheduled for July 2nd.
- Australia posted its first trade deficit since last July, a A$ 91 million gap in April after a A$ 2.3 billion surplus in March. Exports plunged 11.3% on month due to lower commodity prices, while imports slid just 1.3%. Analysts looked for a surplus between A$ 1.5 billion and A$ 2.0 billion.
- The British Halifax house price index jumped 2.6% in May, the largest monthly rise since October 2002. The index fell by a smaller 13.6% from a year ago.
The volume of Euroland retail sales firmed 0.2% on month in April, their first advance in seven months. Because of an upward revision to the March figure to a drop of 0.1%, not of 0.6%, the 12-month decline in retail sales of 2.3% in April was smaller than consensus expectations of a drop of 3.1%. Such was also down form a 4.6% decrease in the year to January. Retail sales were unchanged from their 1Q average level after falling by 3.7% saar in 1Q and 3.3% saar in 4Q08.
French unemployment jumped to 9.1% in 1Q09 from 8.0% in the final quarter of 2008 and 7.6% in the first quarter of 2008. That was the largest quarterly increase in at least 13 years, which is hardly surprising.
British new car sales plunged 24.8% in the year to May.
Japan’s Ministry of Finance quarterly business survey was published. Investment sank 25.3% in the year to 1Q09 after dropping by 17.3% y/y in 4Q08. Profits and sales posted on-year record plunges of 69.0% and 20.4%.
Japanese stock and bond transactions generated a Y 1161 billion outflow last week after an outflow of Y 985 billion in the week to May 23rd.
The Governor of the Reserve Bank of Australia reiterated that monetary policy could be eased further if needed but implied that was unlikely to happen as there are risks to taking such a move. He noted that considerable monetary and fiscal stimulus is now in the pipeline.
Business sentiment in South Africa edged down to 81.8 in May from 81.9 in April.
Greek real GDP growth slowed to an on-year rise of 0.3% in 1Q09 from 2.4% in 4Q08.
Dutch consumer price inflation slowed to 1.6% y/y in May from 1.8% in April.
Three Fed officials will be speaking today: Bernanke, Dudley and Pianalto. U.S. jobless claims, productivity, and unit labor costs get released at 12:30 GMT.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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