New Overnight Developments Abroad: Weaker Pound

June 18, 2009

The pound lost 0.9% in response to poor British data.

The dollar is steady otherwise, with no net change against the euro, Aussie dollar and kiwi, a dip of 0.1% against the Swiss franc, and a 0.2% gain relative to the yen and Canadian dollar.

Equity markets continue to slide.  In the Pacific Rim, stocks fell 1.4% in Japan, 3.7% in Indonesia, 2.7% in Thailand, 1.1% in South Korea, 1.7% in Hong Kong, 1.6% in India and 0.3% in Australia.  Initial European losses have been trimmed, however.  The Dax is now flat, and the Paris Cac and British Ftse are down just 0.2% and 0.1% on the day.

The 10-year JGB is yielding 1.46%, little changed.  Gilt yields fell.

Oil firmed 0.5% to $71.40/barrel.  Unrest continues in Iran, and there’s a report that a Nigerian pipeline may have been damaged severely.  Gold firmed 0.2%.

The volume of British retail sales fell 0.6% in May and 1.6% from a year earlier.  Weakness was concentrated in non-food stores.  Street analysts were expecting the monthly change to be positive. 

The U.K. public sector net cash requirement climbed to Gbp 18.785 billion in May, up 96% from a year earlier.  Public-sector net borrowings of Gbp 19.8 billion were the highest for any month since at least 1993.  Revenues fell 10.8% on year, while spending advanced 7.4%.  Net debt has climbed to 54.7% of GDP from 43.6% in May 2008.  There’s talk that Chancellor Darling may be more concerned about reining in the deficits than the embattled Prime Minister Brown.

The monthly British CBI industrial survey revealed the worst reading for export orders since 4Q98, minus 52%.  Bank of England Governor King dampened hopes for anything more than a sluggish recovery.  M4 rose 0.2% between April and May.

The Swiss National Bank, which holds policy meetings only on a quarterly basis, left its target for 3-month Libor at 0.25% as expected, stressed continuing downside growth and financial risks, projected CPI inflation of -0.5% in 2009, 0.4% in 2010, and 0.3% in 2011, and reiterated a commitment to prevent the franc from appreciating against the euro.  Officials said there is no single intervention point for the currency, however.

The World Bank has raised its forecast for 2009 Chinese GDP growth to 7.2% from 6.5%.

The South African current account deficit widened unexpectedly to 7.0% of GDP last quarter from 5.8% of GDP in 4Q98.

India posted negative on-year WPI inflation in early June for the first time since late 1978.

Swedish unemployment unexpectedly jumped 0.7 percentage points to 9.0% last month.

Italy’s trade gap of EUR 277 million in May was 73% smaller than that posted in May 2008.

Canadian consumer prices firmed 0.2% seasonally adjusted (0.7% unadjusted) and recorded a 12-month uptick of 0.1% in May, down from 0.4% in the year to April.  Core CPI, however, rose to 2.0% on year from 1.8% and was 0.3% higher than in April.  Energy fell 18.6% from a year earlier but rose 4.4% on the month.  The CPI results were higher than expected and above the U.S. results reported yesterday.

Scheduled U.S. data today include weekly jobless claims, the index of leading economic indicators, and the Philly Fed index.

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

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