New Overnight Developments Abroad: Dollar Unchanged against Euro and Yen
August 12, 2009
Ahead of the FOMC announcement at 18:15 GMT today, the dollar is unchanged from yesterday’s closing levels against the euro and yen. It shows gains of 0.7% against the Australian dollar and of 0.4% against the kiwi and lesser advances of 0.2% against sterling and 0.1% relative to the Canadian dollar. The buck has dipped 0.1% against the Swiss franc. The Russian rouble touched a 5-month low against the dollar.
The Fed is not expected to change policy. Analysts are divided on whether economic assessment will be upgraded to recovering from stabilizing.
In the Pacific Rim, stocks in China plummeted another 4.5% and closed down 3.0% in Hong Kong, 2.2% in Indonesia, 1.4% in Japan, 1.1% in the Philippines, 1.0% in Singapore. Stocks firmed 0.3% in Australia and have recovered 0.6% in Germany and 0.5% in Britain.
10-year Bund and JGB yields are 3 basis points lower.
Oil and gold edged down 0.2% and 0.1% to $69.33 per barrel and $946.50 per ounce.
Surprise of the day has been news of a 0.6% drop in Euroland industrial production in June. Analysts had anticipated a 0.6% increase. The drop reverses a 0.6% in May and was led by a 4.2% plunge in consumer durable goods. Output in Italy sank 1.2%, while such was flat in Germany and up 0.5% in France. Industrial production fell 11.4% saar in the second quarter and 17.0% in the year to June. The June level of output was slightly lower than the 2Q average.
Japanese industrial output growth in June was revised down a tenth to a gain of 2.3%, but such still fell by 23.5% from June 2008. The ratio of inventories to shipments plunged 10.0% in June but rose 22.9% from June 2008. Capacity climbed 2.3%, but capacity usage was unchanged.
Japanese domestic corporate goods prices rose 0.4% in July, the first increase since August 2008, but fell 8.5% year-over-year. Export and import prices dropped by 1.5% and 1.1%. Oil product prices led the increase in June.
Australian consumer confidence recorded a third straight improvement and booked the sharpest 3-month increase since at least 1975. Australia’s quarterly labor cost index rose 0.8% in 2Q and 3.8% from 2Q08, down from 4.2% in the year to 1Q09. The results were about as expected.
Greek real GDP as a change from a year earlier finally moved into negative territory. Such dipped 0.2% in the year to 2Q09 compared to gains of 0.3% in 1Q09, 2.8% in full-2008 and 4.0% in 2007. Home sales in Spain dropped 26% in the year to June after a 32% on-year decline in May. French consumer prices fell by 0.4% in July and 0.7% from July 2008. Price weakness was led by energy and food, and core inflation accelerated surprisingly sharply to 2.2% from 1.5%.
The Bank of England’s quarterly inflation report paints a somber economic outlook still full of uncertainty and attaches greater likelihood to sub-target rather than above-target CPI inflation in the medium term Governor King stressed that levels of activity, which are now extremely depressed, will be more important in setting inflation than the growth of activity.
British labor statistics were also released. The claimant unemployment count increased 24.9K and by a tenth to 4.9% of the labor force. The unemployment level of 2.44 million hasn’t been higher since 1995. Average wage earnings posted on-year growth of 2.5% in 2Q both with and without including bonus pay.
Norwegian retail sales volume fell 2.5% in June and recorded a gain of just 1.0% from a year earlier.
South Korean unemployment declined to a 6-month low in July of 3.7% from 3.9% in June.
South African retail sales fell 6.7% in the year to June, the fifth sub-zero result in a row.
India’s industrial production advanced 7.8% in the year to June, a 16-month high.
In China, speculation as ebbed in the wake of yesterday’s softer-than-expected data releases that monetary policy may soon begin to be tightened.
Romania’s current account deficit in 1H09 was 73% smaller than in the first half of 2008.
Aside from the FOMC statement, investors await a rate decision in Norway, where the key rate is likely to hold at 1.25%. Canada and the United States release trade figures at 12:30 GMT. Canadian house prices arrive too, as do monthly U.S. federal budget figures.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
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