New Overnight Developments Abroad: More Signs of Global Economic Improvement

August 26, 2009

The dollar is mostly up despite some good data, suggesting that risk acceptance play may be ebbing.  The dollar has gained 0.6% against the Canadian dollar after Deputy Bank of Canada Governor Lane reiterated that C-dollar strength is a risk factor.  The U.S. currency also climbed 0.4% against sterling and the Australian dollar, and 0.1% versus the Swiss franc.  The buck is unchanged against the euro and has edged down 0.1% against the yen.

Asian stocks mostly gained.  Bourses closed up by 1.4% in Japan, 2.0% in China, 0.8% in South Korea, 0.5% in India, 0.4% in Singapore and 1.1% in Australia.  European markets are off 0.2% in Germany and by 0.1% in Britain and France, however.

The 10-year JGB yield eased 2 basis points to 1.32%.  Bund and gilt yields eased one basis point.

Oil has firmed 0.4% but is trading at $72.36 per barrel after touching $75 on Tuesday.  Gold also recovered 0.4% to $949.60 per ounce.

The German IFO business climate index improved more than forecast to 90.5 in August from 87.4 in July and a low of 82.2 last March but remains below its year-earlier level of 94.4.  Expectations jumped 4.6 points to 95.0, while current conditions advanced 1.7 points to 86.1.  The sharpest advances were seen in wholesaling followed by manufacturing.

Japan’s small business sentiment index compiled by Shoko Chukin Bank climbed to 41.8 in August from 41.1 in July and quarterly average readings of 34.3 in 2Q09 and 26.7 in 1Q09.  Analysts were forecasting a print of 41.2 in August.  The manufacturing component fell 0.7 points, but non-manufacturing rose 1.8 points.

South Korean consumer confidence improved for a fifth straight month and to a seven-year high.

According to a Dutch economic group, world trade volumes increased 2.5% in June, the best monthly increase since July 2008.

The National Institute of Economic Research in Sweden revised projected 2010 and 2011 growth upward to 1.5% and 2.9%.  Swedish consumer confidence advanced much more than expected to +3.1 in August from minus 3.7 in July and minus 21 in April.  But trade figures for July again showed on-year declines of more than 20% in both exports and imports.

Skilled job vacancies in Australia rose for the first time since late 2007 in August, posting a gain of 1.0% but still fell sharply on year.  Australian construction slid 0.1% last quarter, but the engineering component increased 5.7%.

The French finance minister said job seekers rose less than 30K in July, having dropped in June for the first time in 1H09.

Industrial output in Singapore shot up 23% last month and by 12.4% from July 2008, a hugely positive swing from the 9% drop in the year to June.

Malaysian GDP posted a smaller-than-forecast 3.9% on-year drop in 2Q09 after declining 6.25% in the year to 1Q09.

German import prices plunged 12.6% in the year to July, their greatest on-year drop since February 1987.  Non-oil import prices dropped 6.8% after a 12-month decline in June.  Total import prices were 0.9% lower than in June.  Export prices eased 0.2% last month and by 3.6% from July 2008.

Vietnamese CPI inflation slowed in August to 2.0% from 3.3% in July.

South African consumer price inflation dipped another two-tenths to a near two-year low of 6.7% in July on lower food price inflation and the firmer rand.

Japanese corporate service prices slipped 0.2% in July and by 3.4% from a year earlier.

Japanese customs trade data for July were disappointing, as exports fell 36.5% from a year earlier, somewhat more than the 35.7% on-year drop in June.  The seasonally adjusted surplus fell to Y 195 billion from Y 374 billion in June, as exports fell 1.3% while imports advanced 3.0% on month.

The Bank of Thailand left its key interest rate unchanged at 1.25%.  This decision was as expected and was the third straight time than officials met without changing the rate.  The last cut was made in early April, and the rate level constitutes a five-year low.

U.S. Senator Kennedy has died of a brain tumor at age 77.  His absence from the health care debate has been a big liability for the Obama administration.

Scheduled U.S. data today include durable goods orders, new home sales, and weekly oil inventories and mortgage applications.  There also will be a 5-year Treasury auction.

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

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