New Overnight Developments Abroad: Weaker Yen

July 23, 2009

The yen lost 1.1% against the dollar.  In a further sign of less risk aversion, the dollar fell 0.4% against the Australian dollar, 0.3% relative to sterling, 0.2% against the kiwi and 0.1% against the Canadian dollar.  The greenback is unchanged against the euro but 0.3% firmer relative to the Swiss franc.

Ten-year gilt and bund yields are three basis points higher.  The JGB yield is steady at 1.39%.

European stocks are somewhat softer: France off 0.4%, Britain down 02%, and Germany minus 0.1%.  Asian stocks earlier closed mostly higher: Japan 0.7%, Hong Kong +3.0%, Thailand 2.3%, Vietnam 3.5%, Singapore 1.4%, India 2.6%, Indonesia 1.7%, and China 1.3%.

Oil edged 0.3% but remains above $65 at $65.20 per barrel.  Gold exceeds $950 at $954.30 per ounce.

Japanese exports recorded a smaller on-year drop of 35.7% in July, enabling the customs trade surplus to widen to Y 508 billion.  Imports slumped 41.9% in the year to June.  In volume terms, however, exports fell more sharply (27.6%) than imports (18.1%).  The first-half 2009 saw a mere trade surplus of Y 8 billion, with exports off 42.7% and imports down 38.6%.  Japan’s trade surplus with the EU was 71.6% smaller in June than a year earlier.

The British Bankers Association reported the most mortgage approvals in 15 months for June (35.2K after 31.9K in May).  Net mortgage lending of Gbp 2.6 billion was higher than May’s Gbp 2.4 billion but below the first-half mean of Gbp 3.1 billion per month.

British retail sales in June exceeded expectations, rising 1.2% from May and 2.9% from June 2008.  That was the best 12-month increase since December.  Retail sales in 2Q09 went up 0.7% in volume from 1Q09 and posted on-year growth of 1.3%.

Italy’s trade with non-EU countries generated a EUR 155 million surplus in June compared to a EUR 2.36 billion deficit a year earlier.  Imports fell twice as sharply in the past 12 months as did exports.  Italian retail sales were flat in May but down by a much sharper 2.9% from May 2008 than had been forecast.

French industrial business sentiment improved to a reading of 78 in July from 76 in June, 73 in May, 71 in April, and 69 in March.

Swedish unemployment advanced to 9.8% in June from 9.0% in May and 8.1% in June 2008.

Euroland’s seasonally adjusted current account deficit of EUR 1.2 billion in May was the smallest shortfall in more than a year.  Such was down from deficits of EUR 6.1 billion in April, EUR 10.0 billion in March and EUR 21.7 billion in January.  Unadjusted data showed a deficit of EUR 116.9 billion in the year to May but net portfolio and direct investment inflows of EUR 418.1 billion.

Polish retail sales rose 0.9% in the year to June, down from a 1.1% on-year gain in May.  That economy had 10.7% unemployment last month, down from 10.8% in May.

In another sign of reviving Asian activity, Taiwanese industrial production jumped 5.0% in June, cutting the on-year drop to 11.4% from a decline of 18.4% in the year to May.  Export orders also dropped much less steeply last month.

Singapore consumer prices firmed 0.2% in June but posted an on-year drop of 0.5%.  CPI inflation in 1H09 averaged 0.8%.

Late yesterday, the central bank of Brazil cut the Selic interest rate target by 50 basis points to 8.75%.  This fifth and expected move brought cumulative rate declines this year to 500 basis points.  However, officials suggested that policy may now enter a wait and see phase.

Investors await weekly U.S. jobless claims data as well as monthly existing home sales and the latest U. Michigan consumer sentiment indication.  The Bank of Canada will release an Update to its semi-annual April Monetary Policy Report today.  On Tuesday, central bank officials indicated no substantial departures from what they had expected but repeated their voiced concern about excessive C-dollar strength.

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

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