New Overnight Developments Abroad: Dollar Reverses Monday's Rise

September 22, 2009

The dollar has fallen sharply, losing 2.0% against the kiwi, 1.3% against the Aussie dollar, 1.1% versus the Canadian dollar, 0.9% against the euro and Swiss franc, 0.8% relative to the yen and 0.7% against sterling.  After rising on Monday, it is now below Friday closing levels in many cases.

Japanese markets remained shut for the second of three consecutive working day closures.

Ten-year German bund and British gilt yields each climbed four basis points.

Commodities recovered.  Gold advanced 1.2% to $1016.60 per ounce, and oil moved up 1.0% and back above $70 to $70.42 per barrel.

New Zealand posted a current account surplus last quarter of NZ$ 124 million, the first surplus since 1Q03.  The cumulative deficit over the last reported twelve months narrowed to 5.9% of GDP as a result from 8.1% in the four quarters to 1Q09.  Consumer confidence in New Zealand improved to a 20-month high of 120 in September from 114.5 in August and 109.9 a year earlier.  Second-quarter GDP figures are due later today.

The Swiss trade surplus narrowed 19% to Chf 1.79 billion in August even though imports fell 2.5%.

Ahead of the Pittsburgh G-20 summit starting on Thursday, French Finance Minister Lagarde is urging that the group forbid guaranteed bonuses for bankers.

Italian unemployment ticked up a tenth to 7.4% last quarter, highest since 2005.

Unemployment in Finland dipped unexpectedly to 7.6% in August from7.7% in July.

Ahead of a South African monetary policy meeting, a further drop in South African CPI inflation to 6.4% in August from 6.7% in the year to July has been reported.  The CPI firmed 0.3% on a monthly basis.  Although the closes to the Reserve Bank’s 6.0% target ceiling since March 2007, monetary officials are not expected to cut their 7.0% benchmark interest rate further today.

The finance minister of India said borrowing costs need to be kept low to promote the incipient economic recovery.

The Asian Development Bank revised projected growth for the region upward.  Non-Japanese GDP is now expected to rise 3.9% this year and 6.4% in 2010.  An 8.2% growth rate is penciled in for China.

The U.S. FHFA house price index, Richmond Fed index, and Canadian retail sales will be released today.  The FOMC begins a two-day meeting today.

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

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